Trade Magazine Articles, Research Paper Example

Some of the largest corporations in the United States and other developed economies have realized that future growth and profitability opportunities lie in the emerging economies such as India, China, Brazil, and Indonesia etc. This is because domestic markets have saturated and growth rates have slowed down while the emerging economies are experiencing a phenomenal growth in their middle class. But doing business in other countries is not always an easy venture due to various factors including differences in consumers tastes, cultures, political and legal factors, and infrastructure.

The purpose of this paper is to consider strategies that can be used to successfully enter and gain market share in internationalmarkets as well as ensure long term future. The paper also looks at the experiences of different companies that have discovered new rules through their experiences and are successfully employing them. The articles from different issues of Harvard Business Review (HBR) and provide various recommendation as to how multinational companies can succeed in emerging economies.

The marketing concept of 4P’s is known to every person who has ever taken a marketing course or worked in a marketing department. One of the Ps is product and many companies’ first decide on a product and then search for customer segments that can be successfully targeted. This is not always a bad approach since the companies are trying to stay within their competencies but sometimes a reverse approach may be helpful when entering international markets. The reverse approach in this case will mean identifying customers’ preferences first and then meet those needs with a new product or a modified version of a current one. This is because consumers in other countries may have different consumption habits and preferences.U.S. based Heinz’s name is synonymous with ketchup and the company is the world’s largest ketchup manufacturer. But the company soon discovered that consumers in many Asian countries had different applications of ketchup, preferred different formulations, and in many instances the consumption of soy sauce exceeded ketchup. Heinz knew the stakes involved and thus, acted accordingly. It introduced ketchup made from banana in Philippines, soy sauce in China, and a chili sauce in Indonesia. Heinz also introduced small packets of soy sauce in Indonesia which sell for 3 cents apiece to make it more affordable for locals many of whom come from low-income backgrounds and the company sells billions of these packets every year. The company has also taken steps toget involved in the community and has hired many local managers because they have better understanding of their respective cultures. Heinz believes that involvement with communities will improve customers’ perceptions of the company and will pay off in the long term (Johnson).

Heinz approach of getting involved with local communities is a smart one and has also been recommended by Michael E. Porter and Mark R. Kramer. By shared values, the authors mean creating economic values in ways that also benefit the society and address its needs and challenges. The authors argue that the companies who focus on shared values do better in the long run than those whose sole focus is profit and return for shareholders.The authors mention that emerging economies have billions of customers with unmet needs and how some companies are both creating value for the society as well as earning profits in the process. For e.g. Vodafone’s operates mobile banking services in Kenya that signed up 10 million customers in first three years and the funds it handles now accounts for 11% of Kenya’s GDP. Similarly, Thomson Reuter started a monthly weather and crop-pricing information for farmers in India which now reaches two million farmers (Porter and Kramer). It is often suggested that the companies should start small when venturing into international markets and then grow from there as they learn about the new cultures. But authors in an HBR article suggest that the companies should go for an aggressive expansion into international markets. This is because they are not the only ones eyeing the tremendous opportunities in the international markets and moreover, local firms are also not sitting idle. In fact, many companies in emerging economies such as China are as ambitious as their western counterparts and thus, the first movers will have ample advantages over the latecomers or those who are slow to act. The articles give examples of Chinese companies who have become leaders in domestic markets by acting fast such as Xizi in elevators, 7 Days Inn in budget hotels, and Midea in consumer appliances. Aggressive expansion is also suggested because some companies can expect to experience extraordinary growth in demand, thus, they should invest in large production capacities (Stalk and Michael). Thus, it is clear that the rules of competition have changed due to globalization and the companies often need fresh perspectives when entering international markets. They should be willing to learn and act accordingly if it requires entirely different products or ways of doing business. In addition, the companies should also invest in the communities to improve their local perceptions.

References

Johnson, Bill. “The CEO of Heinz on Powering Growth in Emerging Markets.” Harvard Business Review October 2011: 47-50.

Porter, Michael E. and Mark R. Kramer. “Creating Shared Value.” Harvard Business Review January/February 2011: 62-77.

Stalk, George and David Michael. “What the West Doesn’t Get About China.” Harvard Business Review June 2011: 25-27.