Strategies for Emerging Markets
With globalization, multinationals find it challenging to identify the effective strategies to employ when choosing which countries to do business in. Previous untapped markets are gaining prominence leading to the emergence of new markets. These emerging markets pose many challenges to multinationals resulting from various social and political factors. According to entrepreneur Alexander Djerassi, here are some strategies that one can employ to keep up with the trends and competition in emerging markets.
Merger and acquisition
Many emerging markets are affected by political bureaucracy, which discourages multinationals from entering. One can break this barrier through successful mergers and acquisitions of local companies. Local companies’ management has knowledge and familiarity with the bureaucracy, and this knowledge can be of great help while dealing with policy barriers affecting multinationals. A multinational can achieve growth inorganically through mergers and acquisitions when organic growth gets out of reach.
Multinationals fail to take emerging markets with the seriousness required compared to how much talent they invest in developed countries. They often fail to send competent, highly talented managers to oversee their operations in emerging market countries. This lack of seriousness costs their existence, forcing them to shut down after some years of the emerging markets not meeting their expectations. It’s wise to invest in talent and competence among the heads of operations to ensure adept risk and transformation management skills. Remember, an emerging economy requires a manager with excellent networking qualities to build and lead diverse and competent teams.
Branching into a new territory is not always an easy move. Businesses tend to depend on partnerships with foundations, non-profits and government agencies to help them survive. Instead of viewing these organizations as opponents, multinationals need to work closely with them to deal with challenges and risks that arise from their attempts to tap the potential of the emerging markets. This approach is also vital while seeking to fill the talent gaps. Emerging markets are filled with hungry employees for work and learning opportunities. By collaborating with local learning institutions and recruiters, one can attract them to their company, keep them engaged and, in turn, build a stable and talented workforce with required leadership skills to oversee the company’s growth.
Emphasis on low and middle segments of the market
Catering for the middle and low segments of the market in an emerging market helps a company achieve the desired growth in no time. Emerging markets have the middle class as the dominant population; thus, emphasizing products that suit this market segment is crucial to the success of a business. The low-income market segment has a considerable share of an emerging market; therefore, one cannot ignore them. Coming up with products that the low income can afford will give one a sweet spot for growth. According to Alexander Djerassi, brands that focus on selling to these market segments have achieved better results than those focusing on the top segment alone.
With the growth witnessed in the emerging markets, multinationals have no choice but to consider expanding to these markets. With the right approach/strategies and focus on scarcity, communication technology, and uncertainties, they will see that they step into the emerging markets and maintain traction without a hassle.