Emerging Market Strategies: Market Expansion

By M. Isi Eromosele

Increasingly, organizations are broadening the range of their quests in global emerging markets. Over seventy percent of global companies consider market expansion an imperative component in their growth strategies.

Global companies tend to establish operations in emerging markets to improve their time to market speed. A key part of this expansion strategy is the establishment of commercial operations as well as manufacturing enterprises in emerging markets.

Additionally, after-sales services, material sourcing as well as sales and marketing are becoming more prevalent.

Forward thinking companies need to understand that positive and sustained profits would be realized only when they implement global business models in emerging markets. There is a strong association between the number of enterprises a company establishes in emerging markets and the percentage of global profits they accrue from these economies.

Companies with five or more operations in emerging regions earn up to 25 percent of their profits from these enterprises compared to global firms that have only one operation, who derive only 8 percent of their profits from these regions.

There is one fundamental problem: global company investments on market expansion in emerging economies have not kept pace with the evolving capacity and capabilities of these regions.

Additionally, these have not been implemented with the underpinning of a global business model. As a result, performance of their investments in these countries pale in comparison to other regions of the world.

The following are new strategies global companies can implement for growth in global emerging markets:

• Rapidly expand local sales and service operations to manage growth
• Establish world-class manufacturing both in scale and scope to meet global demand more cost effectively
• Increase low cost workforce and enhance their skills to address talent shortage
• Leverage increasing talent and skills base to manufacture high end, more complex products cost effectively
• Build or acquire complimentary technology and assets to better compete with global giants in your market
• Build R & D capability to foster faster product development for local and global markets
• Diversify capabilities and capacity across multiple locations aligned with the strategic goals

It is imperative that companies shift specific functions of their value chains to account for new objectives relating to growth, innovation and sustainability.

As such, there are three success factors that influence the emerging market business model: capacity, capability and risk.

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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