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SDSU Master Thesis: Are MLMs and Pyramids the same thing? A Layperson's Guide to Evaluating This Often Misunderstood Business Model

SDSU Master Thesis: Are MLMs and Pyramids the same thing? A Layperson's Guide to Evaluating This Often Misunderstood Business Model

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Published by Chris J Snook
This Master's Thesis was originally published for the San Diego State MBA program in 2005.
This Master's Thesis was originally published for the San Diego State MBA program in 2005.

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Published by: Chris J Snook on Oct 17, 2011
Copyright:Attribution Non-commercial

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08/18/2013

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Is Network Marketing and Pyramid Selling the same thing? A layperson’s guide toevaluating the pros and cons of this often misunderstood business model.
Author: Chris J. Snook Management 790Business Administration DepartmentSan Diego State UniversityFall 2005 _______________________________ Primary Advisor: Dr. Alex DeNobleProfessor of ManagementSan Diego State University _______________________________ Secondary Advisor: Dr. Michael CunninghamProfessor of ManagementSan Diego State University
 
i
Abstract
The goal of this project was to explore the academic research surrounding the Network Marketing/Direct Sale Industry as well as Pyramid Schemes, in an effort to locate a model andkey characteristics and differences between legitimate and viable NMO’s and illegitimate andfraudulent Pyramid Schemes. Historical case law was also researched to locate some landmark decisions that distinguished illegal and unethical direct-selling business models from ethical andsustainable ones. The culmination of this paper sets forth a set of guidelines, based upon theacademic and legal research previously conducted, to act as a practical evaluation tool for theeveryday “layperson” who is evaluating one or multiple home-based or NMO’s for themselves.The goal is to take the intricate and complex research models, and create a bridge to the “realworld” where most people are looking for a reliable metric to make an investment decision of their time and money into an NMO. These recommendations should be used as a minimumguideline for due diligence if the individual is serious about a low-cost, high-income potentialopportunity.
Key Words
 
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 Network Marketing
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Pyramid Scheme
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Direct Selling
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Organization development
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Ethics
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Home-based Entrepreneurs
 
iiTable of ContentsAbstract iIntroduction/Industry background 1The NMO Consumer’s biggest need 4The Future of Network Marketing 6A day in the life of an NMO consumer prospect 7Landmark court cases and NMO/MLM law 13Practical evaluation of an NMO opportunity 18Conclusion 19 NMO/Pyramid Checklist 20AppendixReferences

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Thanks to those who have read the whitepaper this week. I would love to hear your comments on how it helped you!
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