1: Strategy for the Emerging Markets

Much emphasis in recent years in the boardrooms of companies large and small has been the growing importance of high-growth developing economies, called emerging markets, in achieving strategic growth objectives. Emerging markets demonstrate core characteristics that differentiate them from developed economies and those developing economies that have not been able to grow at sufficient speed to attract the attention of business strategists. Faced with persistently slow economic growth at home, and the progressive saturation of their traditional foreign markets in other developed economies, firms from developed countries have substantially ramped up their strategic efforts in emerging markets. This chapter explores strategy development in the context of emerging markets. The main emphasis of the chapter is in which areas business strategy needs to be adjusted and modified to respond to the specific economic, institutional, and social features of emerging markets. The chapter begins with a brief discussion of the concept itself. The chapter then provides a detailed view of economic, institutional, and social features of emerging markets. Section 2 dives into the specific posture and configuration of business strategies in emerging markets by dividing them into three discrete segments: Tier 1, Tiers 2–3, and Tiers 4–5. These tiers are segmented on the basis of income. Section 3 then offers a detailed set of guidelines on strategic and tactical considerations for each of the tiers. Section 4 is a short concluding section.