INTERNATIONAL BUSINESS IN EMERGING MARKETS

International Business in emerging markets

International Business in emerging markets

Introduction

The fast development and growth of emerging economies present both threats and opportunities for global businesses. A comprehension of the financial development of emerging markets, together with a awareness of the progressively more complex worldwide business market, facilitates better utilization of business opportunities in an more and more aggressive world markets.

For many years now academics have charted the increasing turbulence of the international marketing environment and, in particular, the growing ferocity of competition in most markets. Many North American and European firms have increasingly acknowledged these forces and have attempted to develop market-driven strategies to deal with their consequences. To a large extent, however, they were cushioned by buoyant economic growth in domestic markets and the persistence of government-sponsored tariff and non-tariff barriers. This is now changing rapidly. The world economy is in a deep malaise with even the apparently recession-proof economies of Japan and Germany slowing sharply. Thus, while growth orientations force firms to internationalize, they are faced with world markets where demand is stagnant or declining, particularly in the advanced economies these companies frequently choose to target.

International Business in emerging markets

Firms prepared to take a more global view of competition would recognize the attractions of less developed and emerging industrial countries and, not least, the commercial implications of the dramatic restructuring of central and Eastern Europe. In these latter economies the common, but often neglected, situation arises whereby strong latent demand exists but cannot be satisfied because the need to purchase is not matched by the ability to pay. Under such circumstances, firms which can facilitate payment are able to secure substantial and sustainable competitive edge. In this paper we examine the principal approach taken by companies to build such advantage in international markets: Countertrade.

The objectives of the paper are threefold:

* to report and analyse findings from exploratory research into the nature of generic Countertrade approaches currently implemented by British counter traders in less developed and emerging markets;

* To develop a classification of firms by their posture towards the adoption and usage of Countertrade as a marketing tool, addressing temporal dimensions of Countertrade policy and how Countertrade orientations evolve;

* To assess the degree of company proactivity in countertrade commitment and whether or not companies can be classified by this criterion.

Alexandrides and Bowers' (1987) generally accepted “strategic policy” categorization is employed as an overall framework for the subsequent classification. The findings presented are expected to have value to managers and academics concerned with the creation of differential advantage in international marketing within emerging markets. The following four sections provide, respectively, a review of the relevant literature, the research methodology, a discussion of the results and a presentation of conclusions.

Literature review

Countertrade or modern barter is a widely prevalent and feasible trading mechanism which replaces conventional modes of payment with full or partial payment in goods. The various forms of countertrade have been well documented (Alexandrides and Bowers, 1987; Angelides, 1993; Khoury, 1984; Palia, ...