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Advice for investing in developing economies after your EMBA program

February 01, 2018

Great opportunities - unique challenges

Two men analysing data
Investment in developing economies can be risky, but also rewarding.

"Buy low, sell high," goes the famous investment maxim, though it's tough to predict precisely the best time to get in on any given investment opportunity. There is one likely exception to this, though, in the form of global economies that are growing quickly, and aren't anywhere near reaching their full potential.

For savvy investors, getting in on opportunities in these environments could be key to developing lucrative new relationships and arrangements that will deliver lasting benefit to the bottom line. Of course, most businesses and executives will discover there is a greater degree of difficulty in accomplishing this in developing economies than at home.

Wondering how you might be able to find success investing in developing economies? Here is some useful advice to follow after your EMBA.

Use your EMBA program experience to assess a country’s economic diversity

A country that has many economic drivers and a country that relies almost entirely on a single export, like oil, can have similar balance sheets at the end of the day. Such is the economic game. But what happens if that single export experiences a dramatic drop in value?

Consider, for example, the crash in oil prices that began in 2014. Venezuela and Russia, two developing countries that depend heavily on crude oil for their economies, quickly entered financial crisis, with economic difficulties extending to all kinds of industries. Oil-producing countries that had more diverse economies, like China and Mexico, were much more resilient in the face of that difficulty.

Evaluating a country's economic resilience in the face of potential market collapses can be a challenge, but it's one that good executive MBA courses can help you prepare for. A top program, like the one offered at WU Executive Academy, will include international residencies, allowing you to gain firsthand economic perspective in countries like China, India, Chile, and Brazil. Through these on-the-ground, detailed looks at the structures of a number of developing economies, you can develop a greater ability to evaluate opportunities within the context of their national or regional economy, and thereby make sound investment decisions.

Picture of a pie chart
EMBA training can help you evaluate investment opportunities with economic diversity in mind.

Be wary of currency risk when pursuing international investments

Generally speaking, developed economies have relatively stable currencies. They aren't prone to huge swings in value, and so provide a relatively safe framework to work within. Though the precise cost of business might fluctuate with changing economic fortunes, it will normally stay within range of original estimates.

Developing economies, on the other hand, often have currencies that experience a fair amount more fluctuation, which means dealings in these markets come with a bit more uncertainty. While it's possible to counter some of this risk through establishing contracts and other financial arrangements, doing so can also limit the gains that could be enjoyed should an economy fluctuate in a way that would benefit you.

A man and a woman analysing graphs
Currency volatility can be a blessing and a curse for businesses entering developing economies.

Balancing the risk and reward of investing in a relatively volatile market can be a tricky prospect, even for seasoned business veterans. The advantage held by professionals who completed an EMBA program, though, is that they will have learned about financial management and risk assessment from leading academics and professionals. This can help them approach difficult investment opportunities with clear vision and sound strategy, allowing them to choose wisely when the correct answer isn't perfectly obvious.

EMBA program graduates shouldn't expect business as usual in developing economies

Businesses develop strategies and routines that allow them to operate efficiently. While these are often designed to be scalable, you shouldn't approach international investment with the expectation that existing approaches will be a perfect fit for a new environment. Things that many in developed nations take for granted, like physical infrastructure, stable and fast internet access, and well-established corporate law may not be as available or functional in a developing economy.

The most successful businesses recognize the potential for these kinds of differences, and make a point to complete extensive research and planning before embarking on business efforts in a developing economy. For those businesses with executive MBA graduates at the helm, having access to the wealth of knowledge available in those executives' alumni networks can be particularly advantageous during this stage. Applications to top MBA programs originate all over the world, and come from all kinds of industries, so the odds of several people in one's network having intimate experience with expansion into developing economies can be quite high. Game-changing advice could be just a phone call away.

Do you want to gain the skills necessary for global business success?

Contact WU Executive Academy about our Executive Master of Business Administration Program!

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