HOW TO WIN IN EMERGING MARKETSS

Big stories and grand narratives help anchor our views of a constantly changing world as well as give shape to a portfolio through constant tweaks in the mix of different assets. The big narrative that's been exciting investors for some time is the case for emerging markets and how they will be the home of future economic growth (David Stevenson; 2002). Emerging markets like Asia, Latin America and Eastern Europe are proving to be the decisive factor is world economy; they are leading the world economic growth, despite the fear of lower prices of fast moving goods will result in low profits; they are still getting the good profits. Market leaders like Coca-Cola, Unilever, Colgate-Palmolive, Groupe Danone and PepsiCo earn 50to 15% of their total revenue from three major emerging economies like India, china and Indonesia and similarly in targeted categories of Russia and Eastern Europe where these companies achieve the more than the internal profit targets and this trend is like to continue as well. Thats why in 2006 the gross domestic product or emerging markets where equal to the gross domestic product of developed nations. undoubtedly the most of the growth coming from Brazil, Russia, India , china, eastern Europe and turkey the developing nations. Until past few years the emerging markets were low priority for big companies because they do not have the infrastructure, both physical and institutional, needed for the smooth functioning of markets. It is difficult for buyers and sellers to access information to find each other and to evaluate the quality of products and services.
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HOW TO WIN IN EMERGING MARKETSS

When disputes arise, there are limited contractual or other means, such as arbitration mechanisms, to resolve these issues. Because of a tremendous backlog of cases, resolving disputes in Indian courts, for example, can take five to fifteen years. Some joke that if you litigate here, your sons and daughters will inherit your dispute. Anticipation of these transactional difficulties also hinders contracting (Tarun Khanna and Krishna Palepu; 2010). Even having 85% of the world populations the big companies did hesitate to go in these regions due to someone the above discussed reasons. But they have proved that if they are armed with right strategies they can compete successfully with domestic competitors. To compete in emerging markets, companies try to adopt the market trend and culture of the market to offer those products which are suitable for those customers taste. Not only that they also try to cover the transportation and other resources according to those markets infrastructure. When they enter in any market they try to achieve not only market share but also distribution, brand building and other operation in the cycle of development. As we know multinational companies always target niche premium segments so when they enter in developing countries market they find very small segment of people in those segments, which results in slow growth of their business and as compare to local players they succeed more and expand their market share rapidly. And not only that after growing in middle class markets local players start to move in to niche markets and create a serious threats to foreign market players who already have small market share and less opportunities as compared to their prices. So they have to offer those products in the markets which can compete in middle class sector and with good brand name
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HOW TO WIN IN EMERGING MARKETSS

and infrastructure and success level they succeed more and find new ground of growth in those markets. In 2005 the deal of Philip Morris Int. Inc. purchasing family owned business of Sampoerna in Indonesia was largest deal of 2.5 billion Dollars in the country. The combination of both companies with gave them chance to grow effecticilty inside Indonesia and other markets like Malaysia Singapore, Brazil and Brunei. Sampoerna had strong distribution network and Philip Morris and the capabilities of being the best of distribution system and sales teams in other countries of the world. So in result of the acquisition the first product was Marlboro kretek introduced in the Indonesia market for clove-and-tobacco cigarettes. This acquisition has been an enormous success- the combine volume of company jumped up to 9.1% in the first year and market share 28% and it lead them to become market leader. The success only came when big companies offer products in locals with their needs and cultural effects, by knowing government laws and significantly changing the product features and Offering the products in local flavors and using unconventional distribution. for an example Procter & Gamble Co. even moved its business offers to Chinese people, what did is, they offered the tooth pastes flovers and with herbal elements and even offered saltish tooth paste knowing Chinese thinks salt is good for teeths. This resulted in 0 % to 25 % growth level in market share.

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HOW TO WIN IN EMERGING MARKETSS

Coca cola Co. also did same they acquired the largest Russian fruit drinks co. and created its place in Russian market my acquiring their largest fruits drinks Co. so as Unilever when moved to India they hired 25000 Indian women and trained them and later used them to serve as distributer to more than 80,000 villages and this program generated more than $25 million which otherwise must have been too costly. Localizing means, showing aggressive approach towards brand building. Such as CocaCola dramatics success in china is a living example of such aggressive approach. This resulted in 51% share of all carbonated drinks. Where 31% shared by the PepsiCo. Pricing is the biggest part of any localization strategies. Until unless companies dont find any pricing strategies where they can beat local producers and most importantly which also covers profit margin, finding the affordable prices most of the time requires reconfiguration of the product and creating it with new specifics. All this is called well-enough Cost mentality, means introducing product which has Good Quality and also offers an affordable price in the market. All this required hard and aggressive managements decisions and find the cheapest but good quality production units. Leaders always look at everythings they can control to shift the competitor dynamics in the favor from changing specifications for packaging material to impose greater operating efficient to lower overhead and using local equipment. They think globally, hire locally. The multinational companies do really on expatriates to guide them about their local markets, which most of the didnt produce good results because expatriates dont have that enough knowledge of their markets , expert in local
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HOW TO WIN IN EMERGING MARKETSS

markets are the right choice of guidance and because experts teams in local markets provides the right informations and product design, promotions and distribution channels. But the tight local managements pools also require creativity, flexibility and commitments. Fast- moving consumer goods players risk becoming the training ground for their local competitors, which are sometimes ready to promote faster and pay better than traditional pay scale. They make sure local acquisition have a strong business fit. A strategic acquisition can accelerate multinational firms growth in local markets by using the famous products lines of acquired co. and using their distribution network. Coca cola is the best example of it. This acquired the Russian beverages group Aqua vision. In India Frito-Lay Inc. increased its market share and profit by buying the local Brand uncle Chipps 2000. They redefined their strategies and rather than offering lays and offered Uncle chips with lower price with more ingredients and they also trimmed it flavor line which they already had in lay portfolio. So as Gillette, which was acquired by P&G in 2005 and its world largest batter maker, they acquire the Fujian Nanping Nanfu battery Co. Ltd. The major Chinese rival battery brand, this deal had its own advantages.

They organize for emerging markets. Leaders maximize their investment by building the dedicated emerging markets capabilities. This enables them to reach each emerging market with strategies which are most suitable for those markets and characteristics
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HOW TO WIN IN EMERGING MARKETSS

they find there. Just like American Tabaco PLC, one of the most successful goods coaminies in emerging markets had a long stable international management which was deployed in Asia, Africa and Latin America. Which shows the advantages coamnies gain by having stable management sin local markets results in success most of the time, if not always. An Up company went further ahead and they created a formal emerging marketing organization. Which looks after all emerging markets operations under one tent. This helped them again advantage of having expert and dedicated management to look after their affairs only for emerging markets for growth and the risks involved in it. For multinational companies, emerging market take over and growth is very important for their survival, in todays world big companies cant survive if they dont expand their business in the most potential markets like Asia and eastern European countries. Which offers then growth in double digit? Its a challenge for companies to succeed in

emerging markets which will define their success in world markets.

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