doing business in emerging markets entry and negotiation strategies pdf

Doing Business In Emerging Markets Entry And Negotiation Strategies Pdf

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Fast-growing economies often provide poor soil for profits. The cause? A lack of specialized intermediary firms and regulatory systems on which multinational companies depend.

Doing Business In Emerging Markets Entry And Negotiation Strategies

That is no longer the case. Emerging and developing economies, on a purchasing parity basis, now total 44 percent of the world's economy, and in the last decade, emerging nations were responsible for two-thirds of the world's economic growth. The consumer base in these economies already measures in the hundreds of millions, is young and is growing three times as rapidly as in the developed world.

As recent events have demonstrated, what happens in these economies affects us all. Given these trends, multinational corporations face profound changes in the economic landscape. Over the next 10 to 15 years, most of the total world growth in consumption of consumer goods will likely be concentrated in the largest of the developing economies. In that time span, these strategic emerging markets will grow to be comparable in aggregate size to the Group of Seven leading industrial nations the United States, Japan, Britain, France, Germany, Canada and Italy.

The future scale and growth of global consumer businesses is dependent on their success in building strong positions in these new, challenging markets. There are a handful of consumer goods companies that have already demonstrated the potential contained within the big, emerging markets.

For example, the Coca-Cola Company now derives 37 percent of its revenue from Latin America, Africa and Asia, and these markets contribute a stunning 49 percent of its operating profits. Similarly, the Colgate-Palmolive Company receives 45 percent of its revenue from these same markets and nearly half of its operating income.

These pioneers have been committed to the emerging world for several generations, establishing leadership positions and brands in nearly every important emerging market. Today, in countries such as Thailand, Argentina and Indonesia, these players are identified more often as local enterprises than as foreign multinationals by their consumers.

Emerging market leaders are poised to ride the growth of these economies for years to come. Coca-Cola, for example, is growing at 30 percent per year in China, and its business there is fast approaching 10 percent of its total United States volume.

Nevertheless, per capita consumption in China remains only about 2 percent of that in the United States, pointing to one of the reasons that Wall Street has pushed Coca-Cola's stock price to 45 times its earnings.

The success enjoyed by these pioneers, however, is not the norm. The largest group of multinationals has followed a flag-planting strategy: transplanting existing "first-world" products with minimal investment into a wide variety of new markets, without achieving significant market share in any of them.

While multinationals are quick to cite the extent of their worldwide footprint, the global portfolio of most multinationals remains dominated by United States and Western European economies.

The emerging markets combined in the portfolio of flag-planters are typically limited to less than 10 percent of their worldwide sales. Given their timid positions and weak understandings of these countries, the returns of those who have followed the "flag-planting" route are generally poor.

While there is a natural tendency for multinationals to build upon what made them successful in their core markets in Western Europe and the United States, it is this practice that routinely gets them into trouble.

In reality, consumer goods companies cannot export their business models, products and marketing formulas wholesale from their core developed markets and expect them to work in places such as India, Turkey or Mexico. Emerging markets differ in their governmental policies, regulations and macroeconomic behaviors; in the structure of their consumer markets, distribution systems and competitive sets; in the needs and behaviors of their consumers.

Even the most experienced are not immune from making this mistake, as Coca-Cola recently found in India. When Coca-Cola went back into the market in , it invested heavily behind the Coke brand, using its typical global positioning, and watched its market leadership slip to Pepsi.

Recognizing its mistake, Coke re-emphasized a popular local cola brand Thums Up and refocused its Coke brand advertising to be more relevant to the local Indian consumer. FitzGerald, chairman of Unilever P. Business should not be so mesmerized by the current economic difficulties in these markets that companies ignore the enormous long-term economic potential.

However, realizing that potential will not be easy. It will not only require a greater emphasis on understanding what are the needs of the consumer, but a radically different way of approaching them. How should consumer goods multinationals target the right markets? What sort of business model is needed for emerging markets, and how does it differ from the model to which multinationals are accustomed?

What strategies and organizations work most effectively in countries such as Indonesia, Brazil, India and China? The most important lessons for what it takes to build a large and profitable presence in emerging markets can be summarized in five rules: 1.

Reach the masses: Manage affordability Consumers in big, emerging markets such as Brazil, India, Poland and China have suffered for many years under closed economies and a limited selection of shoddy goods produced by inefficient, domestic manufacturers.

Now, with economic liberalization, freer trade and higher incomes, these consumers are hungry for high-quality products and are prepared to spend. When we discuss the consumer base in emerging markets, however, we need to recognize that it is still significantly poorer than the consumer base of the Group of Seven industrial nations.

There is an even larger mass of the population below this income level that is also prepared to spend, albeit selectively. Only a small fraction of the population of countries such as Turkey or India are well-to-do, middle class by American standards. For example, hypermarkets in Poland have captured only about 12 percent of the market there since they cater only to the portion of the population with cars.

Most retailing in Poland is still done in local shops that people can reach on foot. Nevertheless, families in the emerging markets become active consumers at surprisingly low income levels. For example, refrigerator penetration in Mexico is roughly 90 percent. Television penetration in China's coastal cities is nearly percent.

Improvements in product affordability often lead to large jumps in consumption, particularly for higher value-added goods. One company recently found, for example, that a 20 percent reduction in average pricing in a frozen food category roughly doubled the category's size.

Consumer goods multinationals can build big businesses in emerging markets only if they manage affordability in a way that makes their products accessible to the masses.

Roberto Goizetta, the late chief executive officer of Coca-Cola, set the objective that Coke be the same price as tea in China. As a result, its sales span all income ranges. In contrast, consumer goods companies that attempt to sell only their "first world" products are relegated to being simply "market skimmers" and suffer from retarded category development.

In India, Unilever was ambushed by a local detergent maker, Nirma, that captured a substantial portion of the market with a low-cost alternative to Unilever's premium brands. Only after Unilever completely revised its product, price point, marketing strategy and distribution system was it able to come up with a viable low-cost competitor, called Wheel, priced at nearly one-quarter the price of premium brands. Today, Unilever has regained control of nearly half of the Indian market, and its sales of Wheel exceed the sales of its leading premium brand.

Structuring their product lines for the emerging-market consumer requires that multinationals challenge their product development process and investments. FitzGerald of Unilever made just this point when he said, "Consider how much of our industry's innovation is still geared to the developed world, as opposed to the great many people living in the developing and emerging markets.

We are, for instance, inventing surfactants that cost many times more than those used for the basic job in the developing world -inventing them for minimal gain in the almost functionally saturated West We must shift the focus of our research and development effort to the vast numbers of consumers who in will live in the emerging markets of today. Unilever, for one, believes its scientists need to have an intimate understanding of its consumers that can be achieved only through proximity.

Its chairman asks rhetorically, "Can a United States scientist in California really understand the problems and needs of the consumers in developing and emerging markets? Be ubiquitous: Invest in distribution Distribution is one of the most challenging problems for consumer-products businesses in emerging markets.

While supermarket and hypermarket retailers are increasingly present in major capital cities, consumers living on the peripheries of these cities and in the countryside continue to purchase the large majority of goods through local shops. The tendency of new multinational entrants is to focus initially on large chains in major cities. Their strategy is to build volume quickly, without having to invest in costly sales and distribution systems.

The fact that these retail chains often have familiar names such as Carrefour of France , Wal-Mart of the United States , Sonae of Portugal , and Ahold of the Netherlands adds to their sense of comfort.

There are several difficulties with this strategy, however. The most obvious is that these manufacturers are walking away from what is typically 50 percent to 90 percent of the market. The strategy also puts them in an extremely vulnerable negotiating position with the major retailers. For instance, a local Brazilian yogurt producer distributes 80 percent of its volume to more than 10, small shops around the capital of Sao Paulo.

With these small shops, the producer can command a relatively higher price, and so the company is quite profitable. As a consequence, the producer can negotiate very aggressively with the major chains in the area such as Carrefour, because the producer knows it has this profitable volume base. In contrast, major yogurt producers such as Groupe Danone France are much more dependent on the major chains for their volume and must be much more accommodating in their negotiations.

Failing to build quickly a broad distribution base also allows competitors to more readily combat new entrants. When Quilmes Industrial S. Consequently, C. As a result, Quilmes today struggles with its market share and profitability in Chile. Finding cost-effective ways to build broad and deep sales and distribution coverage in the emerging markets is one of the most critical challenges facing consumer products companies.

This can rarely be done on the cheap. Alliances with local producers that agree to provide distribution rarely work. There are creative alternatives. For example, several consumer products companies have patiently developed a network of exclusive distributors to service small accounts in selected emerging countries. These exclusive distributors can operate at as little as half the cost of broader-line wholesalers, with significantly greater effectiveness.

Even when companies serve smaller shops directly, there may be creative ways to do so less expensively. In several countries, Coca- Cola, which usually visits its smallest retailers once or twice weekly, has proposed that they receive three to four weeks of consigned inventory in return for exclusivity. When Coca- Cola returns at the end of the period, the retailers pay only for the product sold during that time.

For cash-strapped small shop owners, this is extremely attractive. Coca-Cola wins increased sales at the expense of displaced competition and a much lower cost-to-serve, with delivery visits cut by a factor of three or more. Alternative channels can also be effective in emerging markets. For example, in Brazil, up to 15 percent of all apparel is sold through "sack ladies" who sell door-to-door in poorer neighborhoods. The majority of cosmetics as well as other products are typically sold through direct sales forces of hundreds of thousands of working women who pitch products to their fellow workers.

As a result, multinationals such as Revlon Inc. Create desirability: Build strong brands Interestingly, despite the limited financial means of the emerging market consumer, branding could well be more important in these markets than it is in markets such as the United States or Western Europe.

In part, this is due to the aspirational attraction that strong brands have for lower-income consumers, particularly in "badge" categories. For most categories, however, the importance of branding is related to the quality guarantee that it provides. As a consequence, many producers have built brands that command price premiums in categories that to Western eyes would appear to be commodity categories.

For example, the Italian multinational Parmalat S. As a result, Parmalat has been able to command a 10 percent price premium in the Brazilian milk category while building a leading market-share position, in a category previously dominated by regional milk cooperatives more concerned with volume than profit. A fact of life in almost all emerging markets is that multinationals will face competition from local entrepreneurs whose informal operating practices, such as tax evasion or selective attention to labor laws, secures them a large cost advantage.

Brand equity becomes an essential weapon in defending market position in the face of this type of competition.

EBOOK Doing Business in Emerging Markets Entry and Negotiation Strategies.pdf (190.03 KB)

There are many texts available on International Business, but only a few provide a comprehensive coverage of emerging markets, which now play a major role in global business and therefore require deeper study and analysis. This accessible and engaging text focuses solely on these markets and provides extensive coverage. BRICs and other major emerging markets are examined in-depth. Prominent topics regarding emerging markets such as effects of globalization, rise of disposable income, urbanization, economic reforms, new opportunities as well as characteristics of multinationals and domestic firms within such markets are discussed. Real life examples, detailed data and graphs provide a comprehensive framework for a thorough understanding. This fully revised and updated edition reflects the current issues, changes, challenges and opportunities facing businesses in emerging markets, including entry and negotiation processes, as well as risks and strategies. The text is accompanied by a companion website which includes full text articles for each chapter, answers to end of chapter questions, and detailed chapter slides for tutors.

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That is no longer the case. Emerging and developing economies, on a purchasing parity basis, now total 44 percent of the world's economy, and in the last decade, emerging nations were responsible for two-thirds of the world's economic growth. The consumer base in these economies already measures in the hundreds of millions, is young and is growing three times as rapidly as in the developed world. As recent events have demonstrated, what happens in these economies affects us all. Given these trends, multinational corporations face profound changes in the economic landscape.

Doing Business in Emerging Markets

Book file PDF easily for everyone and every device. This Book have some digital formats such us : paperbook, ebook, kindle, epub,and another formats. Search for any ebook online with simple actions. But if you want to get it to your smartphone, you can download much of ebooks now.


Doing Business in Emerging Markets: Entry and Negotiation Strategies

Doing Business in Emerging Markets. Fall The course focuses on large-size emerging economies e.

Несколько этим озадаченная, она вызвала команду поиска и напечатала: НАЙТИ: СЛЕДОПЫТ Это был дальний прицел, но если в компьютере Хейла найдутся следы ее программы, то они будут обнаружены. Тогда станет понятно, почему он вручную отключил Следопыта. Через несколько секунд на экране показалась надпись: ОБЪЕКТ НЕ НАЙДЕН Не зная, что искать дальше, она ненадолго задумалась и решила зайти с другой стороны. НАЙТИ: ЗАМОК ЭКРАНА Монитор показал десяток невинных находок - и ни одного намека на копию ее персонального кода в компьютере Хейла. Сьюзан шумно вздохнула. Какими же программами он пользовался. Открыв меню последних программ, она обнаружила, что это был сервер электронной почты.

 Что. Этого не может. Он заперт внизу. - Нет. Он вырвался оттуда. Нужно немедленно вызвать службу безопасности. Я выключаю ТРАНСТЕКСТ! - Она потянулась к клавиатуре.

Doing Business In Emerging Markets Entry And Negotiation Strategies

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Токуген Нуматака познакомился с Танкадо много лет. Молодой программист приходил когда-то в Нуматек, тогда он только что окончил колледж и искал работу, но Нуматака ему отказал. В том, что этот парень был блестящим программистом, сомнений не возникало, но другие обстоятельства тогда казались более важными. Хотя Япония переживала глубокие перемены, Нуматака оставался человеком старой закалки и жил в соответствии с кодексом менбоко - честь и репутация. Если он примет на работу калеку, его компания потеряет лицо. Он выкинул его автобиографию в мусорную корзину, даже не прочитав. Нуматака в очередной раз посмотрел на часы.

Он появился тремя десятилетиями ранее благодаря усилиям специалистов из министерства обороны и представлял собой громадную сеть компьютеров, призванных обеспечить безопасность правительственной связи на случай ядерной войны. Профессионалы Интернета стали глазами и ушами АНБ. Люди, занимавшиеся нелегальной деятельностью с использованием электронной почты, быстро убедились в том, что их секреты больше не являются их частным достоянием. ФБР, Налоговое управление, Агентство по борьбе с наркотиками и другие правоохранительные агентства США - с помощью опытных штатных хакеров - сумели арестовать и предать суду гораздо больше преступников. Разумеется, когда пользователи компьютеров во всем мире обнаружили, что американское правительство имеет широкий доступ к их электронной почте, раздались возмущенные голоса. Даже те, кто использовал электронную почту лишь для развлечения, занервничали из-за вторжения в их частную жизнь. Корпоративные программисты во всем мире озаботились решением проблемы безопасности электронной почты.

Сьюзан едва успела взбежать на верхнюю площадку лестницы и вцепиться в перила, когда ее ударил мощный порыв горячего ветра. Повернувшись, она увидела заместителя оперативного директора АНБ; он стоял возле ТРАНСТЕКСТА, не сводя с нее глаз. Вокруг него бушевала настоящая буря, но в его глазах она увидела смирение. Губы Стратмора приоткрылись, произнеся последнее в его жизни слово: Сьюзан. Воздух, ворвавшийся в ТРАНСТЕКСТ, воспламенился.

 - Если бы Танкадо подозревал некий подвох, он инстинктивно стал бы искать глазами убийцу. Как вы можете убедиться, этого не произошло. На экране Танкадо рухнул на колени, по-прежнему прижимая руку к груди и так ни разу и не подняв глаз. Он был совсем один и умирал естественной смертью.

Соши пожала плечами. - Открыть. Ну и ну, - ужаснулась.  - Шестьсот сорок семь ссылок на уран, плутоний и атомные бомбы. Похоже, это то, что нам .

Strategies That Fit Emerging Markets

Похоже, нужно было проанализировать политический фон, на котором разворачивались эти события, сравнить их и перевести это сопоставление в магическое число… и все это за пять минут.

 - Ты уже задавал мне этот вопрос, помнишь. Пять месяцев. Я сказала. - Я знаю.  - Он улыбнулся.

 Замечательно.  - Он даже застонал.  - Я позвоню Стратмору и попрошу прислать нам письменное подтверждение. - Нет, - сказала Мидж, - игнорируя сарказм, прозвучавший в его словах.  - Стратмор уже солгал нам .


Они внезапно стали видеть врага в. И мы, те, кто близко к сердцу принимает интересы страны, оказались вынужденными бороться за наше право служить своей стране. Мы больше не миротворцы.


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