Professional Documents
Culture Documents
Navneet Singh
Roll No. 33 B
Sec-B, EPGDIB 13-15
tailor their business to local needs while maintaining their global process. There are
other reasons as well for the firm to think before internationalize. Those firms operate
relatively consistently who have grown organically internationally but find it difficult to
match their product & services with the local need. In comparison to those who have
grown through M&A, contrast may find easier to tailor operation to local market but
harder to integrate back to achieve Economy of scale & scope. Majorly all the global
firms face challenges at a common set on managing strategy, people, cost & risk for
internationalize successfully.
There are few of the challenges counted as per below for the firms when they think to
internationalize into an emerging economy.
1. Which root to adopt for Internationalization from
a. Direct Export / Import
b. Indirect Export
c. Licensing
d. Franchising
e. Joint Venture & Strategic Alliance
f. Direct Investment & Wholly Owned Subsidiary
g. Or the Combination of the above options
2. Foreign countrys guidelines & policies to operate
3. Regulatory Guidelines & its implementation & impact
4. Environment & adaption for Foreign Investment
5. Strength of Law enforcing bodies & its implementation
6. Intellectual Property rights protection
7. Utilization & implementation of technology already available with the firm
8. Decision to adaption of any new Technology for new market
9. Organizational Structure Globalize Vs Localize
10. Selection of right intermediaries & business partner for the firm in local market
11. Taxation Structure
12. Political Environment & Stability.
13. Cultural differences & local practices to do the business.
14. Local issues & Corruption.
15. Target Market Segmentation & Suitable Product Lines for foreign country
16. Demand Quality Vs Price Balance
17. Sensitivity of Product Pricing placement
18. Fastally Change in Purchasing Power of Target Population & firms offering
19. Understanding of Product Life Cycle
20. Industrial Infrastructure
21. Logistics & Supply Chain Management issues
22. Firms Brand Image & Shareholder value in foreign & Home country.
23. Translational and Transaction risk due to fluctuation in Currency conversion rate.
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24. Financing & Accounting guidelines & associated risk in foreign & Home country.
25. Flexibility in transferring the income to parent company.
26. Flexibility to bring more foreign investment & Disinvestment by the firm.
Conclusion:
Experts find the emerging economy market is full with the opportunity & challenges.
More risk more gain slogan goes with the business world. Emerging economies
primarily considered to be a profit center by the firms due to availability of
tremendous growth frontier and consumer base.
Firms should consider the following strategic actions in order to cope with the
Emerging Markets Business hindrances.
1. There should be collaborative approach by the firms to deal with the local
government, bureaucracy, Law practices & regulatory environment.
2. Firms should focus initially to establish Strategic alliances with local suppliers and
business partners & spend time to understand the business environment.
3. Firms should actively participate to invest in local infrastructure development to
showcase its long term perspective to present in local economy.
4. The firm should invest in Research, Training & Development and also should focus
to develop local Human Capital by appointing host country managers.
5. Firm should offer greater responsibility and flexibility to local managers in
emerging markets to support them to adapt best of their local requirement.
6. Firm should consider a demand driven model in emerging economy for market
assessment & develop new framework to define its various policies.
7. Firm should develop the ability to understand the risk in its early days of
expansion so they can strategies their activity to counter the future risk.
Due to its increase in demand & rapid growth, Emerging markets will keep emerging
and Firms will keep profiting from these markets. Risk and challenges are part and
parcel of business and business management. These Emerging markets will contribute
a major role to the global economic and social development to a greater extent and
Firms should be partner in such development by playing their role of investors, job
creators, tax-contributors, and social capital promoter. Businesses based on profit and
loss sharing philosophy and practice are the ones to remain successful in the global
economy.
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