International Mangement Ch. 9

Front 1

Post-industrial countries characterized by high per-capita income, highly competitive industries, and well-developed commercial infrastructure

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Advanced Economies

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Low-income countries characterized by limited industrialization and stagnant economies

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Developing Economies

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Subset of former developing economies that have achieved substantial industrialization, modernization, and rapid economic growth since the 1980s

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Emerging Economies

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Subset of emerging markets that have transformed from centrally planned economies into liberalized markets

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Transition Economies

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Transfer of state-owned industries to private concerns

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Privatization

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Top firms from rapidly developing emerging markets that are fast becoming key contenders in world markets

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New global challengers

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WHAT MAKES EMERGING MARKETS ATTRACTIVE FOR INTERNATIONAL BUSINESS?

1)Emerging markets as Target Markets (The growing middle class in these countries implies substantial demand for a variety of counsumer products such as electronics and autombiles and services such as health care

2)Emerging Markets as Manufacturing Bases (These markets are home to low-wage, high-quality labor for manufacturing and assembly operations)

3)Emerging Markets as Sourcing Destinations (Outsourcing by transferring or delegating non-core tasks or operations from in house groups to specialized contractors

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WHAT MAKES EMERGING MARKETS ATTRACTIVE FOR INTERNATIONAL BUSINESS?

1)Emerging markets as Target Markets (The growing middle class in these countries implies substantial demand for a variety of counsumer products such as electronics and autombiles and services such as health care

2)Emerging Markets as Manufacturing Bases (These markets are home to low-wage, high-quality labor for manufacturing and assembly operations)

3)Emerging Markets as Sourcing Destinations (Outsourcing by transferring or delegating non-core tasks or operations from in house groups to specialized contractors

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NOTE: Using PPP Purchase Power Parity managers can calcualt the estimate real buying power caluclating GDP statistics.

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NOTE: Using PPP Purchase Power Parity managers can calcualt the estimate real buying power caluclating GDP statistics.

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economic transactions that are not officially recorded and therefore left out of government calculations of a nation's GDP.

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Informal economy

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NOTE Emerging Market Potential EMPI compares emerging market countries using factors that, together, provide managers of western firms witha realistic measure of export market potential

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NOTE Emerging Market Potential EMPI compares emerging market countries using factors that, together, provide managers of western firms witha realistic measure of export market potential

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ESTIMATING THE TRUE POTENTIAL OF EMERGING MARKETS

1)Per-capita Income as an indicator (GDP/PPP)

2)Middle class as indicator of Market Potential

3)Using a comprehensive index to Measure Market Potential (EMPI-emerging market potential index)

Back 11

ESTIMATING THE TRUE POTENTIAL OF EMERGING MARKETS

1)Per-capita Income as an indicator (GDP/PPP)

2)Middle class as indicator of Market Potential

3)Using a comprehensive index to Measure Market Potential (EMPI-emerging market potential index)

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RISKS AND CHALLENGES OF DOING BUSINESS IN EMERGING MARKETS

1)Political Instatbilty (the absesne of reliable or consistent governance from recognized government authorities adds to business costs, increase risks, and reduces managers' ability to forecast business conditions

2)Weak Intellectual Property Protection (even if they exist, laws that safeguard intellectual propety rights may not be enforced, or the judicial process may be painfully slow)

3)Bureaucracy, Red Tape, and Lack of Transparency (burdensome administrative rules, as well as excessive requirements for licenses, approvals, and paperwork, all substantially delay business activities. Transparency International: ranks the most corrupt countries, emerging marekts such as Argentina, Indonesia, and Venezuela are among the most corrupt countries.

4)Partner Availabilty and Qualifications (foreign firms need to seek alliances with local companies in countries characterized by inadequate legal and political frameworks)

5)Dominance of Family Conglomerates

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RISKS AND CHALLENGES OF DOING BUSINESS IN EMERGING MARKETS

1)Political Instatbilty (the absesne of reliable or consistent governance from recognized government authorities adds to business costs, increase risks, and reduces managers' ability to forecast business conditions

2)Weak Intellectual Property Protection (even if they exist, laws that safeguard intellectual propety rights may not be enforced, or the judicial process may be painfully slow)

3)Bureaucracy, Red Tape, and Lack of Transparency (burdensome administrative rules, as well as excessive requirements for licenses, approvals, and paperwork, all substantially delay business activities. Transparency International: ranks the most corrupt countries, emerging marekts such as Argentina, Indonesia, and Venezuela are among the most corrupt countries.

4)Partner Availabilty and Qualifications (foreign firms need to seek alliances with local companies in countries characterized by inadequate legal and political frameworks)

5)Dominance of Family Conglomerates

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A large, privately-owned company that is highly diversified

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Family conglomerate

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STRATEGIES FOR DOING BUSINESS IN EMERGING MARKETS

1)Partnering with family conglomerates

2)Marketing to Governments in Emerging Markets

3)Skillfully challenge emerging market competitors

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STRATEGIES FOR DOING BUSINESS IN EMERGING MARKETS

1)Partnering with family conglomerates

2)Marketing to Governments in Emerging Markets

3)Skillfully challenge emerging market competitors

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Formal offers made by a buyer to purchase certain products or services

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Tenders

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refers to providing small-scale financial servies which assist entrepreneurs to start businesses in pooer countries

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Microfinance