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Strategies that fit emerging markets (Summary and

Implications)

Analysis and strategies for emerging


markets
Assignment # 01
BBA-7

Group C
Ahmar Haseeb (130878)
Hamza Rafi (131312)
Fiza Gul (131001)
Maham Asif (130976)

Submitted to: Sir Qaiser


Janjua

SUMMARY:
1

Date: 08-092016

It is not an easy task to identify strategies for entering new international markets or to decide
which countries to do business with. Many firms go with what they know and fall far short for
their goal. Although expansion to international markets may appear to offer significant profit
potential, identification of the proper strategies and markets remain difficult.
Many companies shy away from doing business in developing countries even after knowing that
they have fastest growing markets just because they lack in market institutions needed to do
business successfully such as: consumer data experts, end to end logistics providers and talent
search firms. These gaps have made it difficult for multinationals to succeed in developing
nations. In recent year domestic competitors have performed better at home than in foreign
markets. If western companies do not come up with good strategies for engaging in emerging
markets, they are unlikely to remain competitive.
Many firms choose their markets and strategies for the wrong reasons, relying on getting
everything from senior managers gut feelings to the behavior of rivals. Corporations also
depend on composite indexes for help making decisions. But this analysis can be misleading.
They dont account for vital information about the soft infrastructures in developing nations. A
better approach is to understand institutional variations between countries. The best way to do
this, the authors have found is by using the five contexts framework.
The five context framework are a countrys policy and social systems, its degree of openness, its
product market, capital market and labors markets. By asking a series of questions that pertain to
each of the five areas, executives can map the institutional contexts of any nation.
When companies match strategies, to each countries context, they can take advantage of a
locations unique strength. But firms should weigh the benefits against the cost. If they find that
the risk of adaption is too great, they should try to change the contexts in which they operate or
simply stay away.

Implications:

Companies should go for adaptive strategy in order to capture emerging markets for
example general electric has captures two emerging markets like China and India by
adopting two altogether different strategies.

Only four emerging markets have been discussed ignoring many other blooming
economies like as Malaysia, Pakistan etc. Therefore, authors should not ignore these
economies if he is claiming to talk about strategies that fit in emerging markets.

Rather than going only for one strategy unlike article suggests the companies should
adopt all three strategies developing upon the context and situation.

As according to the author recommendation, to mitigate the risk of short term


competiveness in emerging economies the companies should first analyze each countrys
institutional context, including political and social system openness to foreign investment
and quality of product, labor and capital market.
Then decide: If the company works around targeted countrys institutional weaknesses,
Create new market infrastructures (for example, companys own in-country supply chain
or should stay away.
Example: Dell Computer chose to adapt its business model to enter China. After
discovering that Chinese consumers did not buy over the internet. Dell sold its products
through Chinese distributors and systems integrators. Therefore, it is necessary to
correctly diagnose developing countries' institutional contexts, and make severe foreigninvestment decisions to avoid markets.

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