Emerging Market Harvard Case Solution & Analysis

Emerging Market

Most investors’ defined emerging market as a market of undeveloped country or country that is developing where investments has a potential of high growth but they are accompanied by high risk as well as significant market volatility. Some investors define emerging market as the market that has some characteristics of developed market but not developed yet means that they are in the transition phase from developing to developed markets due to the repaid growth in the emerging markets. Emerging market has greater focus on goods than services (Palash Ghosh, 2010).

Key Capabilities And Characteristics That Firm Must Possess To Be Successful In Emerging Markets:

An emerging market is a process in which country is moving towards open market economy of moving from a closed market economy. But in this process, the political and monetary policy risk is high. An emerging market includes the younger and growing population that is capable of result in higher return over investments. But this can also lead into increased risk of political instability. An emerging market also includes underdeveloped infrastructure that means increase demand for government spending, which often lead to higher cost and less efficiency for business. Emerging market involves increasing foreign direct investment, which may lead strong economic growth in a future. Emerging markets are highly fragmented with the few national brands that have a commanding presence. Emerging Markets are changing rapidly.

This development of market depends upon the factors such as government regulation, business culture & practices and companies’ actions. Consumer habit and society itself is changing due to a rise in the income of people and the improvement in the economics conditions (Vijay, 2005).

Emerging countries such as India, Brazil, China, Mexico and Turkey are experiencing rapid growth, industrialization and modernization as compared to the developed countries. These emerging countries began to produce new global challenges. The emerging markets are attractive markets that have evolving legal system, high business risk environment and low manufacturing bases. The Boston consulting group identified top 100 firms of emerging market that are successfully ventured into global markets, which includes many companies from India, China, Mexico, Turkey and various other countries (Prenhall,2007).

Emerging markets within the BRIC countries (Brazil, Russia, India and China) are growing, where consumers are gaining more purchasing power and protections of economies against the foreign investment are opened. Newly confident BRIC based companies acquire assets in developed economies to achieve growth in the global market. The countries involved are undergoing tremendous change in terms of industrialization, modernization and urbanization. The companies from these countries account for 60 percent of total deal value in emerging market M & A activity. The BRIC countries and the other emerging markets are gaining increased attention from dealmakers in developed economies that are finding growth opportunities (Kengelbach, 2013).

Emerging markets are increasingly contributing in the growth of global markets. As emerging markets in countries grow; as a result an increase in income leads to the emergence of new middle class, which will affect the global demand and economy in the long-run. Many countries that are associated with the high volatility and risk have now reformed. Emerging countries such as China, Brazil and India have become important location for production by implementing new technologies. These countries are also increasing becoming competitors for the countries of developed economy and becoming important consumer market, as purchasing power in emerging marketing is continuously increasing with the development in these countries. Countries that are developed are faced with high costs of production and limited growth in the world economy whereas emerging markets are growing rapidly at a fast pace. The focus of the International Business (IB) has shifted towards analyzing emerging markets and finding the opportunities within these emerging markets. Emerging markets have higher growth of income than developed markets. Trade and investment barriers have reduced over the past decades and this is expected to continue as national economies further integrate. Firms in the global economy are fighting with one another for resources and capital in order to capture the need of newly emerging customers. This will depend on abilities of the companies to innovate and distinguish their strategies from other companies. For example, the benefit of doing business in China for firms likes Coca-Cola, Caterpillar, Carrefour and Ericsson, which have successfully established them in this emerging market of China. It attracts a high level of foreign capital, investment in factories and manufacturing facilities which result in the creation of millions of jobs for the people within the economy. This repaid growth of China has increased the income for the Chinese consumers, which makes it the world largest market for many product firms such as cars and electronics. The domestic firms in emerging markets provide intense competition for multinational firms that are trying to enter in these markets. Emerging firms have efficiency of higher production than multinational enterprises because of their ability to increase the production process in the emerging market conditions. Most of the times, multinationals from developed markets concentrate on high-end .........................

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