Background

Journal Analysis

› Condition of the Emerging Markets

› Strategies Implemented in Emerging Markets

Analysis

› What strategies should be implemented by MNC

in EM markets

Conclusion

Multi-national companies (MNC) entering

emerging markets (EM)

› Why MNC wants to enter emerging market?

› Where is the emerging market?

# 1 : Market for of potential customers.

# 2 : This segment have the

India

Indonesia

Brazil

China

Mexico

Background

Journal Analysis

› Condition of the Emerging Markets

› Strategies Implemented in Emerging Markets

Analysis

› What strategies should be implemented by MNC

in EM markets

Conclusion

Prevalence on informal sector

Social contracts prevalence over legal

contracts

Lack of skill by traditional partners

Societal impact must be felt by the

customers

Operate primarily in informal sector.

Does not represented in GNP

Poorly served

Some may have predatory pricing.

Growing fast

Have multitudes of informal activity, such

as unregistered assets, sustenance farming,

small enterprises, etc.

Relationship are grounded more on social

contracts than legal contracts.

Informal social boundaries dominate over

legal documentation.

Traditional partners, may lack the ability to

enter the market properly.

Traditional Partners :

› Minority of people

› Participate in formal economy

› Understand the global capitalist system

› Value Western products

Development of emerging markets may not

use established patterns

Who are the best partners?

› Non-profit organization

› Socially oriented institutions

Customer in emerging markets demand that

MNC will take greater role in society

problems, such as :

› Poverty

› Over-pollution

› Nature preservation

› Clean water

› Etc.

Challenge : Laws is not enforced properly.

› MNC entering the market will have difficulties

defending their patent, brand, and contracts

because of lack of enforcement mechanisms.

Solution : Westernization

› Firms enter in hopes of in time, the economy will

be Western-alike : legal contracts, better

protection, etc.

Challenge : The Westernization will not work.

Problem :

› Not all people want to act/be like Westerners (30-

60%)

› Not all economy will have the same “path” like

Western economic systems.

Solution : Firms must act not like corporate

imperialism.

Challenge : Global efficiency, national

responsiveness, and knowledge transfer to

maximize economic impact may not work.

› Social benefits influence economic condition

› Shared use of property is common

› Patents or brands may not protect successfully

Solution : Not focus on traditional methods of

development

› Decentralization

› Small-scale

› Have social benefits

Problem : Use of old metrics or existing

performance metrics

Results : Failure, due to wrong

assumptions.

Solution : Treat all convergence to EM as a

new business model, don’t use existing

business model.

Background

Journal Analysis

› Condition of the Emerging Markets

› Strategies Implemented in Emerging Markets

Analysis

› What strategies should be implemented by MNC

in EM markets

Conclusion

# 1 : Acknowledge that approach to

Emerging Market is a new business

model.

› Different strategies and capabilities

› Firms will need additional capability beyond

global capability and integration

› Some Western values may not be profitable

# 2 : Acknowledge that collaboration with

non-traditional partner will be necessary.

› Non-traditional partner will have more social

leverage.

› EM countries customer base choose based on

social, not economical point of view.

› Non-profit organization, community leaders,

village level leadership

# 3 : Acknowledge the locals as partners

› Local partners have better flexibility, have better

understanding of local market, may add local

content

› Product should not be taken “as is” from MNC’s

R & D, but co-evolved with local partners.

# 4 : Firms must bring positive impact to

the society

› Social impacts > Economic impacts

› Local capacity building

› Firms must care about social impacts

Background

Journal Analysis

› Condition of the Emerging Markets

› Strategies Implemented in Emerging Markets

Analysis

› What strategies should be implemented by MNC

in EM markets

Conclusion

Going to emerging market requires new way

of thinking, new way of doing business, new

way of business model.

Impact to society and social should not be

discounted, but nurtured to gain profit.

Firms must not force their own values.

For Indonesia :

› Indonesia as a customer base :

Local companies should work with MNC for profit

and social improvement.

Local companies should leverage their local

advantage, adding local content, adding local

knowledge and supporting entering MNC.

Local companies should push the MNC to put up

more positive society impact.