Monday, April 25, 2016

Considering the Regional Factor within Strategies that Fit Emerging Markets

The article, “Strategies that Fit Emerging Markets,” discusses the difficulty for Western business executives to assess and identify institutional voids of developing countries’ markets when it comes to adapting their business models to these environments. Common hurdles of entering emerging markets (EMs) include the absence of specialized intermediaries/regulatory systems and the inadequacy of composite indices. One of my first reactions to this article was how fascinating it would be to hear from local individuals and businesses from EMs about their perspective of multinational companies’ (MNCs) entering their markets and the gains/losses they received from these partnerships.
The authors’ analyses and recommendations also made me think about how, in a progressively integrated world market, executives should not overlook developing an understanding of the regional economic and geopolitical landscape. This broader framework could complement this article’s narrow, case-by-case method of mapping contexts and tailoring strategies specifically to each individual country’s political and social system, level of openness, as well as labor and capital markets. I think it is indispensable to understand a country’s regional playing field and how they fit into it in order to truly refine a comprehensive understanding of their trade and value networks. 
An example of this potential for vulnerability could include the separate analyses of institutional voids in both Russia and Ukraine before the Crimea crisis (without understanding the broader precipitating circumstances, the effect on the political and military escalation on both EMs, and both nations’ respective positions in their region before and throughout the crisis). A business would have a real chance of coming up with a different decision for entering the EM than if they considered both countries within the context of this region. This “bigger picture” understanding would also help a business potentially identify additional institutional void opportunities in nations that they can help to implement or develop. 
Finally, the last part of this article reminded me of ITC Limited’s CSV approach to driving sustainable economic growth in India. EMs essentially represent a rich source of opportunities for MNCs to bridge such gaps, focus on underserved market segments, and facilitate the functioning of EMs. The three strategies of adapting strategies, changing the concepts, and staying away define the decision alternatives for a business aiming to gain competitive advantage in EMs. These suggested alternatives reflect elements of the options we are presented with in the ITC Limited article (in terms of deciding whether or not to move forward with the CSV model in the dairy market).

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