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    Case 3 Arcelik

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    Nidhi Mittal
    Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

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    Case 3 Arcelik

    Uploaded by

    Nidhi Mittal
    939 views3 pages
    Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

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    Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    939 views3 pages

    Case 3 Arcelik

    Uploaded by

    Nidhi Mittal
    Arcelik faces both opportunities and challenges from expanding into emerging markets. Opportunities include access to growing consumer demand and lower production costs. However, emerging markets also present political and economic instability, weak intellectual property protection, and risks in partner selection. To mitigate risks, Arcelik should carefully evaluate market potential using indicators like per-capita income and middle class size. It can also demonstrate corporate social responsibility by developing affordable products, offering installment plans, and prioritizing local suppliers to support economic development.

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    Question1: Arcelik has been very active in Western Europe.

    Do you

    expect Arcelik’s prospects to be better in emerging market and

    developing economies than in advanced economies? In what ways are the

    emerging market and developing economies attractive to Arcelik? In

    general terms, how can the firm reap benefits from such markets in order

    to maximize company performance?

    Answer 1: Firm can reap benefits from emerging markets and developing

    economies because of the following reasons:

     Emerging markets represent promising export markets for products

    and services.

     They are ideal bases for locating manufacturing activities because

    of low labour costs.

     Emerging markets are popular destinations for global sourcing-

    procurement of products and services from foreign locations.

     The growing middle class in these countries implies substantial

    demand for a variety of consumer products.

    Arcelik should adapt the strategies and tactics to suit unique conditions.

    Firm can reap benefits from such markets by partnering with family

    conglomerates.
    Question2: Arcelik management is keen on entering some emerging

    market or developing economies. What types of risks and challenges does

    Arcelik likely face in doing business in emerging markets? What should

    management do to identify the most promising markets? How should the

    firm adapt its product?

    Answer 2: Emerging markets exhibit certain risks that affect their

    viability for international business. These risks are as follows.

     Political Instability: The absence of reliable or consistent

    governance from recognized government authorities adds to

    business costs, increases risks, and reduces manager’s ability to

    forecast business conditions.

     Weak Intellectual Property Protection: In many Emerging markets,

    laws that safeguard intellectual property rights may not be

    enforced, or the judicial process may be painfully slow.

     Partner availability and Qualifications: Arcelik needs to seek

    alliances with local companies in countries characterized by

    inadequate legal and political frameworks. Through local partners,

    foreign firms can access local market knowledge, establish supplier

    and distributor networks and develop key government contacts.


    Special considerations must be taken into account to estimate the true

    demand in emerging markets. Managers can follow one of three

    approaches to more realistically assess emerging market potential. They

    can rely upon per-capita income, considered the size and growth rate of

    the middle class, and build a more comprehensive set of indicators such

    as the emerging market potential index.

    Question3: Originating from an emerging market, Arcelik may be better

    poised to cater to the economic development needs of emerging market

    and developing economies. In what ways can Arcelik skilfully fulfil its

    corporate social responsibilities in such countries? Suggest specific

    approaches that may include: developing simpler, less expensive

    appliances, arranging for multiple instalment purchases, encouraging the

    f local suppliers and designing products that conserve water and energy.

    Answer 3: Arcelik can display good corporate social responsibility by

    engaging in activities that facilitate economic development in emerging

    market and developing economies. It can serve low income countries

    with inexpensive, specifically- designed products. To lead in global

    household appliances, management needs to improve operational

    efficiency to levels that match or exceed major competitors and increase

    investment in high growth markets.

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