Leverage on excellent investment opportunities
Emerging markets have seen exceptional growth over the past few decades. In fact, about two-thirds of global GDP growth over the past 15 years has occurred in emerging economies. While China and India drive much of that growth, smaller countries like Vietnam, Indonesia, Ethiopia, and Kazakhstan have also seen impressive gains.
These economies along with the new consumer classes that are being formed within them present lucrative investment opportunities for global businesses. However, companies accustomed to doing business in the West would be advised to set assumptions aside and approach emerging economies with a sense of humility. Here’s a look at how companies can grow in emerging economies and how an education from WU Executive Academy can help.
A common misperception of emerging economies, especially those in South and Southeast Asia, is that they are primarily a source of cheap, low-skilled labor. This view, however, is largely outdated. Many emerging economies have modernized rapidly. Today, thanks to significant investments in education and technology, highly skilled workers are as likely to come from India or China as they are from the United States or Germany. As such, attitudes are also changing and global companies need to treat talent and partners in emerging economies as equals.
Assuming that the Western way of doing business is the right way is a strategy for failure. Given how quickly emerging markets are developing, having firsthand knowledge of those markets is crucial. Your Global Executive Master of Business Administration (EMBA) can help you develop partnerships with colleagues in emerging markets. During your EMBA you’ll have numerous opportunities to network with people from around the world. For example, you’ll participate in a Global Team Project consisting of students from Europe, the US, and China. This is an opportunity to collaborate with individuals who have firsthand experience with China, today’s most powerful emerging economy.
Global companies need to adapt to local needs, and this often requires doing extensive local market research beforehand. The consequences of not doing so can be serious. Take the example of Gillette’s experience in India as a case in point. In 2002, Gillette, having had success in more than 200 countries, launched a new razor in India. Indian students in Boston had already tested the razor and loved it, so Gillette had high hopes. But when it was launched in India, the razor was a complete failure. The reason was because running water was necessary to unclog the razor and running water was less widespread in India than in Boston.
To their credit, Gillette executives then went to India and talked to 1,000 men there about their shaving habits. Not only did they learn that running water could not be taken for granted, but that men in India had different priorities than American consumers. While American consumers valued a close shave, Indian consumers were more interested in minimizing cuts. With this market insight in mind, Gillette launched a redesigned single-blade razor that better appealed to the typical Indian consumer. It was a resounding success.
Gillette’s experience shows both what to do and not do when entering an emerging economy. Companies need to invest time and money to actually understand what consumers in emerging economies want. Your EMBA can help you prepare for this aspect of entering emerging markets in a number of ways. For one, the EMBA from WU Executive Academy features residencies in not one, but four emerging economies: Argentina, Brazil, China, and India. In each residency, you’ll learn about succeeding in each region, including the unique issues that businesses face there. You’ll also study strategic marketing management in order to learn how to develop a company’s strategy for target markets.
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Contact WU Executive Academy to learn about our EMBA program.