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Chapter 8
Course Goals (Objectives)
The students will learn basic characteristics of emerging markets and
implications for international firms. The specific objectives of this
chapter are:
1 Understand advanced economies, developing economies, and
emerging markets.
2 Know what makes emerging markets attractive for international
business.
3 Learn how to assess the true potential of emerging markets.
4 Evaluate the risks and challenges of emerging markets.
5 Learn the success strategies for emerging markets.
6 Understand corporate social responsibility, sustainability, and the
crisis of global poverty.
Student Learning Outcomes
When asked to explain the concepts and importance of emerging
markets, students will be able to:
• Elaborate on the main explanations about the classification of global
economies.
• Speak about the main characteristics of emerging markets.
• Explain the evolution of the emerging markets and transition
economies.
• Discuss about the new global challenger and the impact on the
traditional multinational companies.
• Elaborate on firm’s strategies to get adapted to the emerging
markets, take advantages of their opportunities and face the risk of
this global market realities.
Advanced economies, developing
economies, and emerging markets.
Classifying Countries based on Economic
Development
• Advanced economies:
•
o post-industrial countries
o high per-capita income,
o highly competitive industries, and
o well-developed commercial infrastructure.
• Developing economies:
•
o limited industrialization
o low-income countries
o stagnant economies.
• Emerging market economies:
•
o Subset of former developing economies
o Substantial industrialization, and modernization
o Improved living standards
o Remarkable economic growth.
The New Global Challengers
• Some 100 companies from Emerging Markets are poised to become
important 21st-century multinationals. Examples:
•
o Brazil: Embraer, Sadia & Perdiago, Natura
o Mexico: America Movil, Grupo Modelo
o India: Ranbaxy, Infosys, Tata Tea, WIPRO
o China: Galanz, Haier, Chunlan Group Corp., Lenovo, Pearl
River Piano
o Turkey: Koc Holding, Vestel & Sisecam
• The New Global Challengers benefit fromEmerging Markets:
•
o Rapidly growing markets, some of which are large
o Low-cost labor
o Training grounds for competing with global incumbents
o Complex operating environments, which produce some very
capable firms
• The ‘BRIC’ Countries
• Key Differences among the three major country groups
Dimension
Advanced
Economies
Developing
Economies
Emerging
Markets
Representative
Countries
France,
Japan, UK,
USA, CAN.
Angola,
Bolivia,
Nigeria,
Bangladesh
Brazil, China,
India, Indonesia,
Turkey
Number of
Countries (est.)
35
125
30
Population (%
of world)
13%
32%
55%
Approximate
Average Per-
Capita Income
(U.S. dollars;
PPP basis)
$44,400
$3,650
$13,830
Share of World
GDP (PPP)
45%
5%
50%
