Realizing Emerging Realities
Developing economies are no longer lurking below. These new global giants are making waves.
This executive dossier includes the following articles:
Growing By Leaps And Bounds
Guillén, Mauro F.; García-Canal, Esteban
The proliferation of multinational companies from emerging countries has taken observers, policy makers and scholars by surprise. The authors’ research on these up-and-coming MNCs reveals several crucial features that distinguish them from their developed country counterparts, namely related to their speed of internationalization, competitive (dis)advantages, political capabilities, expansion path, preferred entry mode and organizational adaptability. Exploring these factors reveals some of the advantages they enjoy, and how they have at times subverted conventional theories of growth. Managers of traditional, established MNCs can learn from their example by adopting more network-based structures and innovative organizational forms. They also have to think about sources of competitive strength other than technology and brands, especially in the areas of execution and political skills – because the new breed of MNC is fast reshaping global competition.
The Eastern Current
De Meyer, Arnoud
Today when the business world asks where the next innovative product or process will come from, many people start looking East. Based on decades of interaction and interviews with privileged observers in Asia, the author starts by discussing four innovation trends that have been heavily influenced by the growing capabilities in the emerging economies of China, India and Southeast Asia. The sources of innovation have become much more dispersed, the lead user has become fragmented, innovation has shifted from technology to business models, and many innovations now come from simplifying or scaling down existing products or services. Then, the author considers the basic principles of good innovation management that apply across the board, focusing on four areas that require special attention in the emerging Asian context. Understanding the variations is important, he says, so that managers can begin to align their business strategies with each country’s unique competitive advantages, and manage innovation in emerging economies accordingly.
Prior, Francesc; Santomá Juncadella, Javier
The two things that emerging markets lack -access to finance and the extension of credit - are the two basic factors considered as key drivers of economic growth. Yet, for banks, the lack of access to financial services and money transfer facilities in these markets represents a huge business opportunity, especially among low-income segments and small and medium-sized enterprises (SMEs). This article examines three promising new business models: upscaling, whereby existing local non-bank institutions become banks; downscaling, whereby the infrastructure of traditional banks is adapted to serve new segments; and greenfield banking, which involves creating completely new microfinance institutions. All require a willingness to adapt to a very different type of customer, as well as taking an innovative, proactive approach to the challenges of risk assessment and efficiency. For companies in other sectors looking to expand into emerging markets, these three business models can serve as a guide. Using lessons derived from the banking sector, the authors urge all companies to see the profitability of emerging markets through new eyes: study their social diversity in depth; forge local alliances; and use new technology to make up for structural shortcomings and inefficiencies.
On Wings of Eagles
Move over BRICS, Next 11 and CIVETS: The EAGLEs have landed. A new formulation by BBVA Research, which conducts economic analyses for the international banking group, reveals a special group of markets that it feels deserves closer investor attention. The author refers to these countries as EAGLEs, which stands for Emerging and Growth-Leading Economies. These 10 emerging countries will contribute more to global growth than the G7 average in the next 10 years. On top of this, this article identifies a dozen other countries to watch in the so-called EAGLEs’ Nest. Though the opportunities for investors depend on many factors, there are two key areas that are common across all EAGLEs: the rise of the middle class, presenting opportunities for the retail and household service sector; and vast infrastructure needs, of special interest to construction companies in the developed world looking for new opportunities to boost their production capacity.