Every Pyramid Has A False Bottom


By

Mr. Ranjan Upadhyaya
Faculty of Management Science
Banasthali Vidyapith
Village: Banasthali, Tehsil: Newai, District: Tonk
 


Introduction:

The organization work on the basic principle of the division of the power and assigned duties.

In every organization there are three different levels of functionary's people performing different duties with the assigned rights. They are the followings

i) Top Management People involved in performing the decision making process.
ii) Middle Management People involved in implementation of the decision
iii) Line Management people involved in the execution of the decision, which has been passed on to them by the middle management.

i.e. Organization


It is being reflected over here that an organization, which has got the pyramid, has the assigned power at the lower line of the management in the organization. It means that every pyramid in any institutions in any field has the right of power in the line management. It means that the line management has the right to perform the duties for which they are not assigned.

The question here is that the every pyramid does not have a false bottom?

If we take it for the granted that the each organization do possess in which every pyramid do have the false bottom.

It clearly means that the power is not being distributed or assigned at the grass root level in any organization. Again it can be true in few service sectors or in the products sectors depending upon the following

i) Company policy
ii) Type of the involvement
iii) Type of the segregation on the basis of the goods/ service etc
iv) Market share
v) Types of the customer they are dealing with
vi) Profit earnings
vii) Product proliferation etc.

The company success story is continues speeding in the following the bottom line of the operation. The success rate is continuously increasing in the corporate and in the market too because of the change scenario in India. It would be the exhaustive study some of the occasional periphery studies could carried out in the due course of the time to understand the concept of the bottom concept is being false in the liberalization, privatization and globalization era.

Concept:

Pyramid schemes now come in so many forms that they may be difficult to recognize immediately. However, they all share one overriding characteristic. They promise consumers or investors large profits based primarily on recruiting others to join their program, not based on profits from any real investment or real sale of goods to the public. Some schemes may purport to sell a product, but they often simply use the product to hide their pyramid structure.

Types:

There are two tell-tale signs that a product is simply being used to disguise a pyramid scheme: inventory loading and a lack of retail sales. Inventory loading occurs when a company's incentive program forces recruits to buy more products than they could ever sell, often at inflated prices. If this occurs throughout the company's distribution system, the people at the top of the pyramid reap substantial profits, even though little or no product moves to market. The people at the bottom make excessive payments for inventory that simply accumulates in their basements. A lack of retail sales is also a red flag that a pyramid exists. Many pyramid schemes will claim that their product is selling like hot cakes. However, on closer examination, the sales occur only between people inside the pyramid structure or to new recruits joining the structure, not to consumers out in the general public.

Bottom Line at a Glance:

Practically tailing the truth it is a very difficult to make task and we can not limit the decision making process at line because of the following reasons

i) Number of the employees
ii) The product proliferization
iv) Market Size
v) Customer Choice
vi) Low disposable income of the customers etc.

Strategies:

i) Low cost of operation
ii) Success rate is high
iii) More earnings
iv) More incentives for the line staffs
v) Quick response forms the customers etc.

Merits:

i) Quick or the fast decision making process
ii) Minimum investment and maximum profit
iii) Edge over the competitors
iv) Time tested tools of marketing
v) Easy to catch market
vi) Less risk involved
vii) Maximum output etc.

Comparative Studies:

It is important to also note the time-variant component of the Bottom of the Pyramid. There is an enormous, emergent middle-class in India and China that was not present 20 years ago, and going forward, this part of the bottom of the pyramid will likely surge in numbers and, therefore, market size. About 10 million Indians are getting out of poverty and into the middle class every year. The purchasing power of the Chinese is also increasing very rapidly. I don't this number is going to approach the size of the American market any time soon, but at least, companies will see huge *increases* in market size. So, whether you believe in the 15 years estimate or not depends on your own analysis of the growth of these markets. In some ways, the BOP principle is an idea whose time has come. My own suspicion is that some level of governmental help might be needed to allow SMEs (Small Medium Enterprise) to grow. At least in the area of finance, it is clear that governmental restrictions on MNCs (Multinational National Companies) has helped credit to be available to segments of the population that would not have such access

Examples:

I) Amway Corporation

Since distributors were compensated both for selling products to consumers and to newly-recruited distributors, there was some question as to whether this was a legitimate multilevel marketing program or an illegal pyramid scheme.

First, Amway required distributors to buy back any unused and marketable products from their recruits upon request. Second, Amway required each distributor to sell at wholesale or retail at least 70 percent of its purchased inventory each month -- a policy known as the 70% rule. Finally, Amway required each sponsoring distributor to make at least one retail sale to each of 10 different customers each month, known as the 10 customer rule.

2) Computers

I agree that the thousand fold price decrease and million times more powerful computers were because of Technological advancement BUT someone had to invest HUGE amount of money in first place. If the computer market would have been 10 or 20 computers per year (as predicted by some IBM manager for year 1985) there would have been no research in computers. This is like chicken and egg situation. Difficult to tell which came first. Mass market or huge investment. But I think any product when mass produced for 1 billion more consumers will have significantly lower prices. And that could free up resource of the poor for other (hopefully) better things.

3) Washing Machines:

If every family from Great Indian Middle Class decides to buy a washing machine (which should be around 200 million I think) prices could be slashed to 20 to 40 % of the original price. Now having washing machine can free up 1+ hour a day for each family now this time IFF utilized can provide a boost to entire economy. Now here I make my assumptions clear. * There is potential market of 200 million washing m/c in India * The time freed could be of a student doing his studies or of an engineer doing work or (civil engg starting salary are about 4K. so they come in almost bottom) or that of any working women. So if we see big picture the ending could be really happy if all decide to buy (useful) stuff. So it turns out to be matter of efficiency boost that poor can get through consumption of Value Adding commodities. And list of such things can be stretched from Roti maker, microwave, washing m/c, hair dryer (yes that can save 5 mins a day), a moped (hands down), why stop here? Why not a tractor for farmers? And now talking about lone sharks. It's very wrongful to picture ALL of them in black. And the lone shark rates are 4-15 % pm depending upon the RISK factor not just because they like to suck you dry.

Looking Ahead:

Unfortunately, pyramid schemes are likely to continue to proliferate both here and abroad in the near future. However, we can all help stem the tide by working together. Members in the banking or financial sector can help law enforcement agencies in several ways. First, if your country does not have a law that makes pyramid schemes illegal, we should encourage your government to enact the necessary legislation and provide sufficient resources for enforcers to pursue pyramid schemes. Associations of reputable bankers or insurers, whose businesses can be jeopardized by the illicit schemes of unlicensed insurers or securities dealers, can be effective allies.

Tips:

1. Beware of any plan that makes exaggerated earnings claims, especially when there seems to be no real underlying product sales or investment profits.

2. Beware of any plan that offers commissions for recruiting new distributors, particularly when there is no product involved or when there is a separate, up-front membership fee. At the same time, do not assume that the presence of a purported product or service removes all danger.

3. If a plan purports to sell a product or service, check to see whether its price is inflated, whether new members must buy costly inventory, or whether members make most "sales" to other members rather than the general public. If any of these conditions exist, the purported "sale" of the product or service may just mask a pyramid scheme that promotes an endless chain of recruiting and inventory loading.

4. Beware of any program that claims to have a secret plan, overseas connection or special relationship that is difficult to verify

5. Beware of any plan that delays meeting its commitments while asking members to "keep the faith.

6. Finally, beware of programs that attempt to capitalize on the public's interest in hi-tech or newly deregulated markets.

Cautions:

Many pyramid schemes advertise that they are in the "pre-launch" stage, yet they never can and never do launch. By definition pyramid schemes can never fulfill their obligations to a majority of their participants. To survive, pyramids need to keep and attract as many members as possible. Every investor fantasizes about becoming wealthy overnight, but in fact, most hi-tech ventures are risky and yield substantial profits only after years of hard work. Similarly, deregulated markets can offer substantial benefits to investors and consumers, but deregulation seldom means that "everything goes," that no rules apply, and that pyramid schemes are suddenly legitimate.

Thus, promoters try to appeal to a sense of community or solidarity, while chastising outsiders or skeptics. Often the government is the target of the pyramid's collective wrath, particularly when the scheme is about to be dismantled. Half of the pyramid's recruits may see themselves as victims of a scam that we took too long to stop; the other half may view them as victims of government meddling that ruined their chance to make millions. Government officials in Albania have also experienced this reaction in the recent past.

Conclusion

As we continue to pursue pyramid schemes, we would be delighted to coordinate our efforts with law enforcement in our countries too. It is only too evident that the expansion of fraud across borders and on the Global Marketing or the domestic market means that no one agency or country can work effectively on its own. We must be collectively vigilant in order to protect the integrity of our market places and the pocket books of our consumers.

Finally, you can encourage the relevant officials in our countries to combat pyramid schemes by educating consumers and businesses about how to recognize and avoid this type of fraud. This can be particularly important in emerging markets, where experience with investment opportunities may be scarce.
So in the Liberalization Privatization and Globalization  era when every corporate want to cut their cost of the operation the Pyramid structure can definite boost their sales and moral and longevity in the global market.
 


Mr. Ranjan Upadhyaya
Faculty of Management Science
Banasthali Vidyapith
Village: Banasthali, Tehsil: Newai, District: Tonk
 

Source: E-mail July 23, 2007

         

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