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The Future of Business in Emerging Markets

Book Description

Since most developed world economies will grow slowly under the burden of public and private debt in the next decade, the corporate focus on growth opportunities has shifted to emerging markets. Financial indicators already suggest sales and profit growth will largely come from emerging markets. Written by a leading expert in emerging markets, this book explores what will change economically and what are the overriding business megatrends that will shape corporations and their strategies in global markets. It shows how companies can take advantage of that growth opportunity in emerging economies in the most efficient way and how to prioritise resources geographically for the best short, medium and long-term returns.

Table of Contents

  1. Cover
  2. Title
  3. Copyright
  4. Contents
  5. Author’s preface
  6. Introduction
  7. Chapter 1: Economic Mega-trends until 2020
    1. 1. AN AGE OF MODERATE AND HIGHLY VOLATILE GLOBAL GROWTH
    2. 2. THE POOR MEDIUM-TERM OUTLOOK FOR THE DEVELOPED WORLD
    3. THE EUROZONE
    4. Sovereign debt crisis
    5. Outlook for Western Europe
    6. EU responses
    7. UNITED STATES
    8. JAPAN
    9. 3. THE RISE OF EMERGING MARKETS AND THE RELATIVE STAGNATION OF THE DEVELOPED WORLD
  8. Chapter 2: Strategic and Structural Success Factors
    1. THE UNPRECEDENTED RISE OF COMPETITION
    2. COMPETITIVE FORCES AT WORK
    3. Greater focus on emerging markets by multinationals
    4. Rise of emerging market multinationals
    5. Medium sized firms focus on global expansion
    6. Domestic competition
    7. MAKING SURE YOUR EMERGING MARKETS BUSINESS IS SUSTAINABLE
    8. STRATEGIC AND STRUCTURAL ISSUES
    9. RELENTLESS CORPORATE FOCUS ON GROWTH (OTHERWISE THE COMPETITION WILL EAT YOUR LUNCH)
    10. TREAT EMERGING MARKETS WITH AS MUCH FOCUS AS DEVELOPED WORLD MARKETS
    11. BUILD AND NURTURE A “TWO HEADED MONSTER”
    12. AVOID MIXING DEVELOPED WORLD AND EMERGING MARKETS CORPORATE STRUCTURES
    13. AVOID CORPORATE SHORT-TERMISM
    14. ENGAGE IN LONG-RANGE PLANNING FOR EMERGING MARKETS
    15. SHIFT TO LONG-TERM CORPORATE INVESTMENTS IN EMERGING MARKETS
    16. ENABLE THE EXECUTION OF LONG-RANGE PLANS
    17. BOARD DIVERSIFICATION IS ESSENTIAL TO BROADEN CORPORATE HORIZONS
    18. MAKE SURE THAT THE EXECUTIVE CORPORATE LEADERSHIP FULLY SUPPORTS STRONGER UPFRONT INVESTMENTS IN EMERGING MARKETS
    19. DO NOT EXPECT AUTOMATIC MARKET LEADERSHIP – INSTEAD, NURTURE AN UPFRONT INVESTMENT CULTURE AND PROACTIVE, SUSTAINED BRAND-BUILDING
    20. DEEPEN COUNTRY-LEVEL PRESENCE, INFRASTRUCTURE, CAPABILITIES AND COMPETENCIES – REGIONAL STRATEGIES ARE NOT ENOUGH
    21. MAKE SURE THAT THE CORPORATE LEADERSHIP IS AWARE OF THE SHEER NUMBER OF EMERGING MARKET OPPORTUNITIES – AND CHALLENGES
    22. DECENTRALIZE DECISION MAKING, BUT NOT TO THE EXTREME
    23. INCREASE ON-THE-GROUND RESOURCES FOR FACE-TO-FACE BUSINESS FUNCTIONS AND MANAGE BACK OFFICE FUNCTIONS IN CENTRALIZED OR REGIONAL CLUSTERS
    24. FLEXIBILITY IN APPROACH AND STRUCTURES
    25. GEOGRAPHIC LEADERSHIP AND ACCOUNTABILITY IS A CRUCIAL PIECE OF THE GROWTH PUZZLE
    26. THINK CREATIVELY ABOUT FINANCING EMERGING MARKETS EXPANSION
    27. DO NOT FINANCE YOUR COUNTRY-LEVEL EXPANSION JUST WITH EARNINGS GENERATED FROM THOSE COUNTRIES
    28. SUSTAIN GROWTH INITIATIVES
    29. NEVER EVER IGNORE ANY COMPETITOR – REBUILD COMPETITIVE INTELLIGENCE TO A POINT OF SUPERIORITY
    30. SPEED AND URGENCY MUST BE PART OF AN EMERGING MARKETS APPROACH
    31. FORGET FLY-IN, FLY-OUT MANAGEMENT AND INCREASE LOCAL CONTROL OVER YOUR BUSINESS
    32. CLOSE GEOGRAPHIC GAPS PROACTIVELY AND FOCUS ON SMALLER COUNTRIES
    33. ONE MAN AND HIS DOG
    34. RELATIONSHIP-BUILDING IS CRITICAL
    35. USE YOUR STRENGTHS TO COMPETE AGAINST EMERGING MARKET MULTINATIONALS
    36. IF YOU ARE AN EMERGING MARKET MULTINATIONAL READING THIS, EXPLOIT THE WEAKNESSES OF BIG GLOBAL PLAYERS
    37. ACCELERATE KNOWLEDGE EXCHANGE WITHIN A FIRM
    38. LEARN FROM OTHER FIRMS
    39. INTENSIFY MARKET MONITORING TO ANTICIPATE CHANGES AND PRIORITIZE RESOURCE ALLOCATIONS
    40. CONTINGENCY PLANNING AND CONTINGENCY EXECUTION ARE ESSENTIAL
    41. MARKET SHARE IS AN IMPORTANT KPI
    42. CONSIDER ACQUISITIONS AS A WAY TO GROW
    43. BE EXTRAORDINARILY CAREFUL WITH COST-CUTTING IN GROWTH MARKETS
    44. AVOID JOINT VENTURES IF YOU CAN; OR STRUCTURE THEM IN A WAY TO PROTECT YOUR FUTURE
    45. THINK OF STEP-UP CHANGES
    46. AVOID DOING THINGS THAT MIGHT DAMAGE YOUR LONG-TERM BUSINESS
    47. RECOGNIZE AND APPRECIATE THAT DIFFERENT MARKETS SOMETIMES REQUIRE DIFFERENT APPROACHES TO BUILDING BUSINESS
    48. RECOGNIZE AND APPRECIATE THAT DIFFERENT MARKETS SOMETIMES REQUIRE DIFFERENT TIMEFRAMES FOR SUCCESS
    49. DO NOT MICRO MANAGE FROM A DISTANCE
    50. MOVE MANUFACTURING AND R&D TO CHEAPER LOCATIONS
    51. MAKE SURE YOU DO NOT UNDER-PENETRATE MARKETS
    52. INCREASE CULTURAL SENSITIVITY IN EVERYTHING YOU DO
    53. GET YOUR HR STRATEGY RIGHT
    54. MOVE INNOVATION TO A COMPLETELY NEW LEVEL
  9. Chapter 3: Building and Executing Marketing Excellence
    1. PRODUCT
    2. Multiple market segments
    3. Treat customers/consumers with respect
    4. ENGAGE IN A VERY SCIENTIFIC, FREQUENT AND LOCALIZED UNDERSTANDING OF CUSTOMER GROUPS AND SEGMENTS
    5. TO FIND MORE GROWTH, MATCH THE PRODUCT’S PORTFOLIO WITH ACTUAL NEEDS
    6. SEEK TO QUICKLY MATCH YOUR COMPETITORS’ PRODUCT AND POSITIONING STRATEGY – OR BETTER, LEAD THE WAY
    7. EMERGING MARKETS OFFER OPPORTUNITIES FOR NEW POSITIONING – USE THEM TO IMPROVE MARGINS
    8. PROMOTION
    9. MAKE SURE YOUR PROMOTION ACTIVITIES ARE NOT LAZY
    10. ENGAGE A BROADER TEAM TO FINE-TUNE MESSAGES THAT RESONATE
    11. DISTRIBUTION
    12. PARTNER SELECTION – SELECT THOSE THAT ARE WILLING AND ABLE TO FOLLOW YOUR FAST-GROWTH STRATEGY
    13. WORKING WITH DISTRIBUTORS – SOME IMPORTANT POINTS
    14. Local placements within distributor organization
    15. Building strong relationships
    16. Engaging or replacing complacent distributors to ensure growth
    17. Helping your distributor (and even customers) financially
    18. Distributor competition
    19. Compliance monitoring
    20. LIMIT THE POTENTIAL FOR YOUR LEADERS TO PRIVATELY BENEFIT BY DOUBLE-CHECKING WHO THEY HIRE AS DISTRIBUTORS
    21. ASSESS IF IT MAKES SENSE TO BUY OUT LOCAL DISTRIBUTORS
    22. BE FLEXIBLE IN APPROACHING DISTRIBUTION CHALLENGES
    23. FOCUS ON CLOSING ANY GEOGRAPHIC AND CUSTOMER/CONSUMER GAPS
    24. PRICING
    25. BE CAREFUL WITH PRICING WHEN TIMES ARE TOUGH – PRESERVE YOUR MARKET SHARE
    26. IF YOU ARE IN MARKETS WITH LESS COMPETITION, USE HIGHER PRICES TO BOOST MARGINS – AT LEAST UNTIL THE COMPETITION ARRIVES
    27. CONTROL PRICING IN THE CHANNEL
    28. ADJUST TO LOCAL PRICE POINTS
    29. Some additional B2B marketing wisdom
    30. Marketing and selling to governments
  10. Chapter 4: Human Resources Wisdom for the Future
    1. TRENDS IN RECRUITMENT
    2. SEEK ENTREPRENEURS AND “MASTERS OF BUSINESS CREATION”
    3. BUILD LOCAL TALENT
    4. BRING IN INTERNAL STAFF FROM DEVELOPED MARKETS
    5. A MORE PROACTIVE APPROACH IS NEEDED WITH THE YOUNG ONES
    6. USE TOUGH ECONOMIC TIMES TO PICK THE BEST
    7. HIRE EVEN WHEN YOU DON’T NEED ANYONE
    8. RETENTION STRATEGIES
    9. REMEMBER THAT REPLACEMENT COSTS ARE HIGH – GET RETENTION STRATEGIES RIGHT
    10. EMPLOYEE NEEDS
    11. PROVIDING BENEFITS, DRIVING MOTIVATION AND PRODUCTIVITY
    12. RETENTION STRATEGIES AND PERSONALIZATION
    13. MAKE SURE YOU KNOW YOUR EMPLOYEES REALLY WELL
    14. EMPLOY AN ASSET MANAGEMENT MINDSET
    15. DEVELOPMENT STRATEGY OBJECTIVES
    16. Analyzing needs
    17. Deciding what, how and where to develop
    18. Development reward and recognition
    19. BUILD AND TRAIN YOUR OWN TALENT
    20. INVEST IN HIGH-END LEADERSHIP TRAINING BECAUSE GOOD MANAGERS ARE NOT ENOUGH
    21. BUILD AND MENTOR YOUR COUNTRY-LEVEL SUCCESSION POOLS
    22. ALIGN INCENTIVES WITH LONG-TERM GOALS AND MARKET SHARE GAINS
    23. TESTING AND TRAINING CREATIVITY IN ORGANIZATIONS
    24. CREATIVITY IS ESSENTIAL AT THE INDIVIDUAL AND ORGANIZATIONAL LEVEL – TEST IT AND TRAIN IT
    25. SEND SOME OF YOUR EMERGING MARKETS STAFF TO OFFICES IN THE DEVELOPED WORLD
    26. CONTINUOUSLY UP-SKILL ALL YOUR STAFF
  11. Chapter 5: Acquisitions as a Way to Grow
    1. STRATEGIC CONSIDERATIONS
    2. DRIVING FORCES
    3. ACQUISITIONS
    4. RESEARCH THE BACKGROUND OF THE TARGET COMPANY
    5. EXAMINE THE TARGET COMPANY’S MARKETS, PRODUCTS AND MARKETING
    6. PAY SPECIAL ATTENTION TO FINANCIAL DUE DILIGENCE
    7. DETERMINING MARKET VALUE
    8. THINK ABOUT LONG-TERM EARNINGS STREAMS
    9. UNDERSTANDING THE TECHNOLOGY
    10. COMPLIANCE DUE DILIGENCE
    11. IF YOU ARE BUYING A MANUFACTURING PLANT, DO NOT FORGET TO DO ENVIRONMENTAL DUE DILIGENCE
    12. LEGAL DUE DILIGENCE
    13. INCLUDE ORGANIZATIONAL STRUCTURE AND HUMAN RESOURCES IN DUE DILIGENCE
    14. ASSESS THE ROLE THAT PERSONAL RELATIONSHIPS PLAY
    15. RESTRUCTURING AND INTEGRATION – BE AWARE OF WHAT IS WAITING FOR YOU
  12. Chapter 6: Tips for Executive Survival and Advancement in Emerging Markets
    1. EMBRACE AND ACCEPT THE GROWTH STORY – OR AT LEAST WHOLE-HEARTEDLY PRETEND YOU DO
    2. MANAGE EXPECTATIONS PROACTIVELY DOWNWARDS, ALL THE TIME
    3. MANAGE EXPECTATIONS ALL THE WAY TO THE TOP – BRING THE TOP GUYS OVER TO VISIT YOUR AREA
    4. WORK ON REALISTIC AND SUSTAINABLE TARGETS
    5. ALWAYS DISGUISE CERTAIN BUSINESS INITIATIVES FROM THE PEOPLE ABOVE YOU – HAVE AN UNOFFICIAL BUDGET
  13. Chapter 7: Best Practices for Medium-sized Firms Going Regional or Global
    1. UNDERSTAND THE MARKETS BEFORE YOU DO ANYTHING ELSE
    2. USE EXTREME CAUTION AND RESEARCH IN DEPTH WHEN PRIORITIZING WHERE TO GO FIRST
    3. FOCUS ON SUSTAINING THE BUSINESS, RATHER THAN A QUICK SELL
    4. USE YOUR SMALLER SIZE TO BE MORE NIMBLE AND QUICKER THAN BIGGER COMPANIES
    5. SET UP REGIONAL OFFICES FIRST, COUNTRY OFFICES SECOND
    6. MAKE SURE YOU SELECT THE RIGHT PEOPLE TO RUN YOUR EXPORT BUSINESS AND INTERNATIONAL EXPANSION
    7. FOCUS TEST PRODUCTS AND SERVICES BEFORE GOING IN
    8. PUT EXTRA FOCUS ON SMALL COUNTRIES WITH LESS COMPETITION
    9. LAST BUT NOT LEAST: APPLY THE LESSONS FROM THIS BOOK
  14. Chapter 8: Strategic and Business Economic Outlooks by Region
    1. EMERGING ASIA
    2. RESILIENCE IN ASIAN MARKETS
    3. CHINA
    4. INDIA
    5. LATIN AMERICA
    6. POLITICAL CHANGE
    7. SUSTAINED GROWTH
    8. CENTRAL AND EASTERN EUROPE
    9. VARIABLE GROWTH
    10. FUTURE PROSPECTS
    11. MIDDLE EAST AND NORTH AFRICA (MENA)
    12. IMPACT OF OIL PRICES ON CORPORATE APPROACHES
    13. RECENT CORPORATE INVESTMENT
    14. STRONG FUNDAMENTALS
    15. DANGERS AND RISKS
    16. OUTLOOK
    17. SUB-SAHARAN AFRICA
    18. RISKS
  15. Chapter 9: Selected Economic Risks Executives Should be Aware of
    1. HOT MONEY IMPACT ON CURRENCIES
    2. Ideological causes
    3. Controlling hot money
    4. COMMODITY PRICES AS A RISK TO BUSINESS PLANNING
    5. Oil price variations
    6. IMPLICATIONS FOR BUSINESS
    7. OVERALL LEVEL OF PUBLIC AND FOREIGN DEBT
    8. LEVEL OF FOREIGN EXCHANGE RESERVES
    9. CURRENT ACCOUNT BALANCE
  16. Epilogue
  17. Bibliography
    1. SOURCES FOR HR CHAPTER
  18. About the Author
    1. BIOGRAPHIES OF CONTRIBUTORS TO THE HUMAN RESOURCES CHAPTER