Since the early 1990s, developing countries have been the fastest-growing market in the world for most products and services. Companies can lower costs by setting up manufacturing facilities and service centers in those areas, where skilled labor and trained managers are relatively inexpensive.If Western companies don’t develop strategies for engaging across their value chains with developing countries, they are unlikely to remain competitive for long.Companies that choose new markets systematically often use tools like country portfolio analysis and political risk assessment, which chiefly focus on the potential profits from doing business in developing countries but leave out essential information about the soft infrastructures there.

1. Strategies That Fit Emerging Markets
By:
Group 2
Vatsal Srivastava
Amit yadav
Pushpak kumar
Rashi kakar
Geetanksha
chawla

2. Background
CEOs and top management teams of large
corporations, particularly in North America, Europe,
and Japan, acknowledge that globalization is the most
critical challenge they face today. They are also keenly
aware that it has become tougher during the past
decade to identify internationalization strategies and
to choose which countries to do business with.

3. In the context of globalization the absence
of specialized intermediaries, regulatory
systems, and contract-enforcing
mechanisms for foreign entrants in
emerging markets ,is known as
"institutional voids"
What is an Institutional Void

4. Examples of Institutional Voids
1. Companies can't find skilled market research
firms to inform them reliably about customer
preferences so they can tailor products to
specific needs and increase people's willingness
to pay.
2. Few end-to-end logistics providers, which allow
manufacturers to reduce costs, are available to
transport raw materials and finished products.
3. Before recruiting employees, corporations have
to screen large numbers of candidates
themselves because there aren't many HR search
firms/recruiters that can do the job for them.

5. Successful companies develop strategies for doing
business in emerging markets that are different from
those they use at home and often find novel ways of
implementing them, too.
It took decades to fill institutional voids in the West
How can institutional void be filled?

6. Since the early 1990s, developing countries have been
the fastest-growing market in the world for most
products and services. Companies can lower costs by
setting up manufacturing facilities and service centers
in those areas, where skilled labor and trained
managers are relatively inexpensive, these markets
have been given the name of emerging markets.
What do we mean by Emerging Markets?

7. Many companies often target the wrong countries because:
1. They deploy inappropriate globalization strategies.
2. Many corporations enter new lands because of senior
managers' personal experiences, family ties, gut feelings,
or anecdotal evidence.
3. Others follow key customers or rivals into emerging
markets.
4. Biases, too, foreign investments.
Why companies often target wrong countries?

8. Companies that choose new market systematically
often use tools like
1. Country Portfolio Analysis
2. Political Risk Assessment
3. Market Size Growth
4. GDP & Per Capita Income
5. Population Composition & Growth
6. Exchange Rates
7. Purchasing Power Indices
8. World Economic Forum's Global Competitiveness
Index
9. Its weight in emerging market funds investments
Tools for Choosing New Markets

9. All these indices chiefly focus on the potential profits from
doing business in developing countries and the political
stability of the country
but
leave out essential information about
1. Growth competitiveness Index ranking
2. Business Competitiveness Index ranking
3. Governance indicators(Political stability, Government
effectiveness, Control of corruption)
4. Corruption Perceptions Index ranking
5. Composite Country Risk Points
6.Weight in Emerging Markets Index
Trouble with composite Index

10. Some of emerging markets identified by U.S.A. are:
1. Brazil
2. Russia
3. India
4. China
Emerging Markets Identified
by U.S.A & West

11. Companies often base their globalization
strategies on country rankings, but on most lists,
it is impossible to tell developing countries apart.
According to the six indices above, Brazil, India,
and China share similar markets while Russia,
though an outlier on many parameters, is
comparable to the other nations. Contrary to what
these rankings suggest, however, the market
infrastructure in each of these countries varies
widely, and companies need to deploy very
different strategies to succeed.

12. Five Context Institutional Framework
1. Political & Social Systems
2. Openness
3. Product Markets
4. Labour Markets
5. Capital Markets
Proposed Framework to Map
Institutional Contexts

13. The five contexts (below) can help companies spot
the institutional voids in any country. An application
of the framework to the four fastest-growing markets
in the world reveals how different those countries are
from developed nations and, more important, from
one another.
Mapping Contexts in Brazil, Russia, India, and
China

14. Political
structure
U.S./ EU Brazil Russia India China
Vibrant
democracy, fair
and enforced
laws
Vibrant
democracy,
corruption in
federal and
states
governments
Centralized
government
with some
regional
freedom.
Existence of
corruption
Vibrant
democracy.
Corruption in
state and local
government
Communist
party
maintains
monopoly.
Officials may
abuse power
openness
U.S./EU Brazil Russia India China
Open to all
forms of
foreign
investment
except govt
have concerns
about potential
monopolies
Entry for
Greenfield
investment and
acquisition
Both
Greenfield and
acquisition are
possible but
difficult
Restrictions in
some sectors
makes joint
ventures
necessary
Permits
Greenfield
investment and
acquisition,
Acquired
companies are
most likely to
be state
owned.

15. Products
market
U.S./EU Brazil Russia India China
Availability of
sophisticated
product
design.
Protection of
trademarks
and IPR
Existence of
local design
capabilities.
IPR disputes
with U.S.
Strong local
design
capability but
enforcement
of IPR is
patchy
Some local
design is
available.
Regulatory
bodies
monitor
product
quality and
fraud.
Limitation
and piracy
abound and
punishment
varies by level
of corruption
Highly
developed
infrastructure
Good network
of highways
and ports
Descent
logistics
network but
trans-ural-
Russia is not
developed
Poor
conditioned
roads , ports
and airports
are also under
developed
Road network
is well
developed and
excellent port
networks.

16. Labor
markets
U.S./EU Brazil Russia India China
Well trained
talent exist
Large pool of
management
talent.
Large pool of
management
talent.
Highly liquid
pool of
English
speaking
management
talent
Small and
static market
for managers.
Capital
market
Easy
availability of
loans.
Well
developed
corporate
bond market.
Good banking
system with
healthy
market for
IPO.
State owned
banks.
Growing
consumer
credit market
and IPO.
Well
developed
local banking
system. MNC
can rely for
their needs.
Local banking
systems are
under
developed.

17. Companies should go for Particular strategies in order
to capture emerging markets.
1. Adapt Your Strategies
2.Change the contexts
3. Stay away
For example
General Electric has captured two emerging markets
like China & India by adopting two altogether
different strategies.
Concluding Remarks

18. Thank You