EMERGING MARKETS

Entering Into Emerging Markets

Entering Into Emerging Markets

Introduction

The economic success of the emerging markets has been highly visible at the global level in the form of high rates of economic growth, and large current account surpluses, which have shaped international capital flows and impacted on the world economy. The success has also been visible with the emerging countries themselves in the form of rapid industrialization and urbanization, which has been highly beneficial in terms of income growth.

The main leaders of the companies in the emerging markets want to be innovating at the core of their business models. Two unambiguous structural changes that are driving this growing ambition. The first is the increase in raw materials and labor (Wengrowski 2004). As emerging markets have grown, natural materials and human resources have grown much more expensive. Compliance with the "low-cost provider" promise has become much more difficult. Emerging market companies are seeking new ways to create a new value. Simple diversification is not enough, they need to innovate.

Discussion

The issues of market potential

As competition intensifies and the pace of technological change accelerates, firms need to renew themselves. The challenge is not only offering new products and services, but also changing the nature of management within organizations. This can take place by, for instance, adapting organizational structures, processes, and practices to generate an invaluable source of competitive advantage. Early studies clearly show how modern management may not only change an organization and bring potential benefits to it, but also redefine an industry by influencing the spread of new ideas. Hence, scholars have directed their attention towards management as a fertile ground for innovation. Researcher define modern management as 'the generation and implementation of a management practice, process, structure, or technique that is new to the state of the art and intended to further organizational goals'. Accordingly, in this definition 'newness' related to modern management at large, in other words, new to the world. Well known examples of modern management are lean production introduced by Toyota, brand management and marketing strategies (Travis 2007, pp. 54).

Scholars have proposed that leadership can effectively stimulate innovative thinking, and have shown that it significantly impacts organizational choice. Because management innovation represents a rather encompassing change in the way management work performed, we see leadership as a preeminent issue in understanding how organizations introduce such a potentially complex innovation.

The other structural change comes from the demand side: consumers and customers who once told the market to new companies to "build to spec" or "eligible" to the lowest possible price, also known as price China - are now looking for extra values and additional features, too. If Wal-Mart once facilitated the transformation of China into a low-cost producer, capable of delivering huge amounts of good enough products for supply chain, the Hewlett-Packard, IBM, Vodaphone, and apples are looking to partner with suppliers who can offer challenging new low-cost and quality features.

Emerging markets companies are responding. Taiwan's HTC, for example, is an innovator in emerging markets, whose products do not see ...