Strategies That Fit Emerging Markets
June 03, 2009
Reaction paper no. 1:
Strategies that Fit Emerging Markets
The article basically speaks of the strategies required for multinational companies to be able to penetrate and successfully operate their businesses in the developing countries. The authors pointed out that the development of these strategies is one of the major challenges the companies are faced with in today’s globalization. The reason primarily, is the underdeveloped stage or even in some instances, the absence of specialized intermediary firms, regulatory system and contract-enforcing system which the authors refer to as “institutional voids”. They mentioned that this absence is the reason why emerging markets “often provide poor soil for profits”. Arguably, with the on-going growth in the developing countries, services and product demand is without a doubt at its highest in these markets, therefore making them a “fertile soil for profits”. The companies, however, should make a thorough research to determine whether the market is mature enough to receive their services and products or not, and if their research would produce positive feedbacks, they could then check if there are ways to work around the “institutional voids”. Furthermore, businesses can not expect these so-called voids to be immediately filled-up during the emergence process of these markets. These have long been established in the developed countries and can not be expected to be fully developed yet or even present in some developing countries. Agreeably, the multinationals have been highly dependent on these institutions in their home-base and would need to create major adjustments in their business models to be able to successfully operate in the emerging markets.
With this challenge facing the companies, the authors came up with the concept device they called ‘five contexts frameworks’ that would help the business minds to strategize by understanding the differences between home and developing
Reaction paper no. 1:
Strategies that Fit Emerging Markets
The article basically speaks of the strategies required for multinational companies to be able to penetrate and successfully operate their businesses in the developing countries. The authors pointed out that the development of these strategies is one of the major challenges the companies are faced with in today’s globalization. The reason primarily, is the underdeveloped stage or even in some instances, the absence of specialized intermediary firms, regulatory system and contract-enforcing system which the authors refer to as “institutional voids”. They mentioned that this absence is the reason why emerging markets “often provide poor soil for profits”. Arguably, with the on-going growth in the developing countries, services and product demand is without a doubt at its highest in these markets, therefore making them a “fertile soil for profits”. The companies, however, should make a thorough research to determine whether the market is mature enough to receive their services and products or not, and if their research would produce positive feedbacks, they could then check if there are ways to work around the “institutional voids”. Furthermore, businesses can not expect these so-called voids to be immediately filled-up during the emergence process of these markets. These have long been established in the developed countries and can not be expected to be fully developed yet or even present in some developing countries. Agreeably, the multinationals have been highly dependent on these institutions in their home-base and would need to create major adjustments in their business models to be able to successfully operate in the emerging markets.
With this challenge facing the companies, the authors came up with the concept device they called ‘five contexts frameworks’ that would help the business minds to strategize by understanding the differences between home and developing
References: • Business Processing Association Philippines/BPAP (2007). Offshoring and Outsourcing Philippines: Roadmap 2010. BPAP. World Wide Web, http://www.bpap.org/bpap/index.asp • Shameen, Assif (2006). Outsourcing. Business Week. World Wide Web, http://www.businessweek.com/globalbiz/content/sep2006/gb20060919_639997.htm