Emerging Market Strategies: Capacity

By M. Isi Eromosele

India and China continue to be pillars of global GDP growth. Companies are aggressively targeting these and other emerging economies to achieve their global growth targets.

However, doing business in developing countries is not an easy task. Doing so requires an in-depth understanding of the market, culture and local constraints.

Additionally, sufficient sales forces and support infrastructure would have to be put in place. These would facilitate the introduction of products in these new market regions.

As global companies continue to rapidly expand their business operations in emerging markets, they need to change their revenue models to tap into demand growth and compete with local emerging competition.

From a capacity perspective, companies do need to continue expanding their presence in the global emerging markets. Operations in emerging markets low cost centers allow companies to take advantage of favorable currency arbitrage and build capacity for local and international markets.

Global companies in big emerging markets such as Brazil, Russia, India and China (BRIC) need to expand both the scale and the scope of their production capacity. In the past several years, the demand for consumer and industrial products in the BRIC and other emerging market countries has risen greatly.

Consumers in these markets have consistently demonstrated a large demand for a wide range of products. As demand in emerging markets mirror those in the developed world, companies need to grow their capacities for product development, manufacturing and marketing to meet the need for increased local demand.

Customized price points will have to be developed for these key markets. High-end, established global companies should turn their facilities in emerging markets into export hubs through increasing manufacturing capacity to meet local and international consumer demands.

Talent shortage is a consistent challenge in emerging markets. General workforce abounds, but special skills are in short supply. Of the 90 million skilled workers in China, only 10 percent are specialized.

Global companies would need to develop specialty training programs for their emerging market workforce to bring them to global standard, facilitating the ability of these firms to increase their production as their markets demand.

M. Isi Eromosele is the President | Chief Executive Officer | Executive Creative Director of Oseme Group - Oseme Creative | Oseme Consulting | Oseme Finance

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