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International Business Strategy 2014-16

Vishwadeep Mishra
MBA IB 2014-16
Section A
Roll Number 55A
Topic of Analysis
What are the challenges likely to be encountered by the
businesses in the emerging economies internationalizing at a fast
pace?
Methodology Followed :
A) Analyze the Businesses
B) Explore the growth potential, problems and opportunities in
emerging markets
C) Evaluate the Internationalization aspect ( fast paced )
Part A
Analyze the Businesses
I have divided the businesses in two broad categories
I. Domestic Businesses Startups, Domestic Corporate Houses etc
II.
International Businesses Multinational Companies , Global
Organisations etc
Domestic Businesses:
Challenges :
1:
2:
3:
4:
5:

Lack of Infrastructure:
Lack of Natural Rescources:
Lack of Business Expertise and Standard Practices
Lack of Technological Advantage
Competition put up by Global Businesses

International Busineses:
1: Lack of Economical, Cultural and Political Knowledge of the Country
2: Competition put up by Domestic Companies
Two Major Challenges are :
1: Clashes in the Economy between Domestic Businesses and
International Businesses, Conflicted Consumer Mindset

2: High Risks associated with Emerging Markets


Part B
Explore the growth potential, problems and opportunities in
emerging markets
Growth Potential of Emerging Internationalizing Markets
The high growth potential is also associated with higher risks specially
when the economy is experiencing high growth rate of internationalization

The impact of 2008-09 crisis was most visible on developed economies ,


emerging markets have rebounded from the crisis and the growth rate in
key sectors in exponential, some examples of these emerging markets are
China, India and Brazil.
It is shown in the graph given below.

Source ( IMF )

It is often said that according to various studies that over 70% of world
growth will come from emerging economies.

Part C
Evaluate the Internationalization aspect ( fast paced )
In emerging economies like India and Brazil the poverty levels have fallen
dramatically in the past decade. Similarly overall inflation, has decreased
in the developing world which in turn has increased the purchasing power
parity of consumers, this is a positive sign to the businesses because the
high capital inflow and higher level of incomes can result in new markets
to sell their products, because of these wealthier citizens, the growth rate
will be further increased through the expansion of new credit facilities.
Poor domestic infrastructure both public and private limits evenlydistributed growth, this hampers the further investment and development
in major business hubs of emerging economies. China, Brazil and India are
facing severe problems in this case.
There are other issues as well which includes weak institutions, safe
business environment and corruption which dissuade investors from
making investments in the emerging markets and the makes business
environment more challenging.
Level of transparency and legal protection is also a big dampener for the
businesses in emerging markets, businesses need to devise their own
strategies to protect their self interests should they decide to work in
emerging markets.
A bigger challenge is the lack of properly developed distribution networks,
which results in lower levels of service and operations, businesses in
these emerging markets need to develop their own distribution networks
to thrive. It is very critical for businesses to understand that there can be
huge differences in the level of income and growth potential, similarly the
transparency of the institutions, or the accessibility of distribution
networks play a critical role in defining the success of doing businesses.
Attractive markets are very lucrative but also they pose higher risks thus
deciding which markets are best suited for a business requires a deep
analysis of these factors which can be both business specific and market
specific. These economic indicators such as GDP, population size, etc.
alone can lead businesses to either flourish or flounder.

A higher level of market intelligence and a deep understanding of cultural


differences can be particularly helpful instruments for success in growing
markets. Strategic moves like strong business relationships can give
firms a particularly powerful advantage to navigate successfully in these
challenging environments. Economies facing fast internationalization can
prove to be lucrative A lack of familiarity, language or distance can be
daunting to companies. With adequate talent, a carefully articulated
strategy and deliberate execution, they are not insurmountable.

Challenges & Opportunities : Summary

In emerging markets if a business intends to expand to fast before the


market matures then there is likelihood of facing the risks of making
costly mistakes that can prove to be detrimental to it. On the other hand,
if the expansion happens late, then these business may end up wasting
time and critical resources.

The emerging markets are experiencing huge growth rates and the
Internationalization aspect is offering numerous opportunities for opening
as well scaling the businesses. Recent deals and expansions prove to be
proof to this. A recent example over the past few months is that India has
become the fastest growing global market for Amazon after only two
years of setting up operations.
To conclude, emerging markets, given their challenges and opportunities,
will top the Internationalization list for all companies both domestic and
international. However, as the window of opportunity shrinks and the high
risks as well as challenges , businesses will have to reinvent their
approach and strategies by focusing on building core competencies, the
right culture and technical prowess . All these factors will help in making
businesses successful in the emerging markets.