Though competitive barriers in Asia, Latin America and Eastern Europe are many, a look at the companies that are thriving there reveals some secrets that make success more likely. Nevertheless, emerging markets in Asia, Latin America and Eastern Europe are delivering some of the strongest revenue and profit growth for global makers of fast-moving consumer goods — everything from snacks to toothpaste — despite concerns that lower prices translate into lower profits.
Quote It has for some time been a truism that if you want to see the division of world power, you need to look beyond the map of nation-states. A slew of multinational corporations have annual gross incomes that exceed the GNP of entire nations.
The familiar story of the rise of multinational corporations focuses on the usual suspects: In the last twenty years, that story—and the multinational map of corporate power, as it were—has undergone a fundamental shift: In their book Emerging Markets Rule: Emerging market multinationals EMMs are now at the top of markets as varied as household appliances, ready-mix concrete, seamless tubes for oil drilling, regional jets, meat, bread and candy.
Yet recognition of this trend has been spotty at best. Yet a March search of the previous year turned up only one mention in the New York Times, while the 98th-ranked firm, California-based VMWare, showed 1, results for the same period.
A article in Forbes by Tarun Khanna and Krishna Palepu of Harvard Business School authors of the book Winning in Emerging Markets summarizes the history and essential features of emerging markets.
The term was first coined in by economists at the International Finance Corporation. In sum, it denotes countries and markets playing catch-up: In addition, emerging markets are often distinguished by some level of political and institutional instability, and ongoing demographic growth. Definitions aside, the dramatic surge of EMMs certainly represents a sizable geopolitical shift.
Yet just as significant as the fact of companies in developing countries asserting global dominance are the methods by which they have done so.
This is a revolution not just in who but in how. EMMs have made their mark by moving boldly, swiftly, strategically and often stealthily; by nimbly negotiating the often volatile political and economic landscapes of other emerging markets; and by treating joint ventures and other initial forays into acquisition and expansion as learning experiences.
This approach, the authors contend, stands in stark contrast to the more plodding, rigid, top-down methods traditionally employed by entrenched multinationals. Most of these companies, and their owners, cut their teeth in environments characterized by political and institutional instability, and a range of limitations in infrastructure, technology and capital.
Early on, they learned to make more out of less and to be comfortable with risk, volatility and uncertainty. As well, many are either family- or government-owned, are free from the second-guessing of stockholders, and thus able to keep their eyes on the long-term prize, even if their strategy results in some short-term bumps in the road.
None is more important than the first: Among old-guard companies, the authors argue, strategizing has become both a ritual and a crutch. The Japanese electronics firm Matsushita now known as Panasonic developed a once highly touted year strategic plan — but then lost ground in the marketplace due to insufficient attention to detail.
By contrast, the Mexican company Bimbo challenged and eventually overtook established power Sara Lee in the bread business through relentless attention to operational detail. Faced with an uphill battle, the Mexican upstart knew its only chance was to win the battle of execution.
Because bread is a commodity in which freshness and timing are of the essence, Bimbo computerized its distribution network in a way Sara Lee never had. On the other hand, in expanding to China, the company deployed tricycles in order to make timely deliveries to older parts of town with streets too narrow to accommodate trucks.
You execute to figure out what strategy works, and then you pursue it relentlessly by focusing on execution itself.Dec 15, · “ How to Win in Emerging Markets.” MIT Sloan 49 (3): Thus, emerging market customers/prospects have no concern about negotiating a price or other element in the course of reaching an agreement on cost, delivery terms, Harvard Business Review 84 (7/8): Harvard Business Review on Thriving in Emerging Markets by Harvard Business Review, , Compete in China's new high-tech market - Win the war for talent in developing economies - Serve the bottom of the pyramid profitably Harvard Business Review on Thriving in Emerging Markets.
Harvard Business Review.
In order to win in the emerging markets, Khanna and Palepu outline a practical framework for developing emerging market strategies based not on broad categorical definitions like geography, but on a structural understanding of these markets. The Emerging Market Era.
Review By Paul van der Boor Summer Reverse Innovation: Create Far From Home, Win Everywhere.
Vijay Govindarajan & Chris Trimble. pages, Harvard .
Harvard Business Publishing Clients Win Awards in CLO Learning in Practice Awards Competition Merck and Goodyear Win For Leadership Development Programs Based on Leadership Direct Merck was named Gold winner in the Global category for its Emerging Markets Future Leaders Program.
Most executives manage their companies as if the solution to that problem lies in the external environment: find an attractive market, formulate the right strategy, win new customers.