MN3206K Assignment 1: Emerging Markets, Singapore

University Kaplan University (KU)
Subject MN3206K: Emerging Markets

Introduction

The Individual report focuses on identifying and analyzing an emerging market of your choice to assess its potential for investment. This task will help you determine the attractiveness of a potential market, especially in Asia, Africa, or Latin America, and make recommendations for your company’s next phase of expansion.

The Problem

Your Managing Director (MD) has tasked you with identifying an emerging market that will support the company’s expansion. The company aims to design new business models, products, and services for this chosen market. Your MD is particularly interested in understanding the “institutional voids” within the selected market and welcomes your suggestions on how these voids could be overcome. In your analysis, you should justify your choice of the emerging market and propose innovative business models, products, or services tailored for this market.

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Report Structure

Step 1: Evaluating Market Attractiveness

Evaluate the overall attractiveness of an emerging market at the country level where the selected company is not yet active. You should use suitable criteria such as:

  • Cultural distance
  • Administrative distance
  • Other relevant factors based on the provided checklists in Moodle.

Assessing these criteria will help you justify your choice of market.

Step 2: Identifying Institutional Voids

Identify some of the ‘institutional voids’ in your chosen emerging market. Institutional voids refer to areas in the market where the necessary infrastructure, regulations, or institutions are lacking. To identify these voids, you can use sources such as:

  • World Economic Forum Global Competitiveness Index
  • World Bank
  • IMF
  • OECD Studies

Choose only those institutional voids that directly impact the operations of your company, and focus on those that the company can address. Avoid selecting macro-level voids that require government intervention.

Step 3: Researching Business Models, Products, or Services

Conduct research to identify business models, products, or services that other companies in comparable emerging markets have adopted to address similar institutional voids. You can refer to:

  • Peer-reviewed journals
  • Academic articles
  • Industry reports

This step will provide you with examples of strategies that have successfully overcome institutional voids.

Step 4: Recommendations and Strategy

Provide specific recommendations and a strategy for how your chosen company can enter the emerging market. Outline clear steps the organization should take to implement the plan. Your MD will expect:

  • A detailed strategy for entering the market
  • Specific actions to overcome the identified institutional voids

Conclusion

The goal of this report is to assess an emerging market’s potential for investment, identify institutional voids, and propose innovative solutions. Your recommendations should be supported by thorough analysis, practical business models, and clear strategies that align with the company’s goals for market expansion.

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MN3206K Assignment 1: Emerging Markets

Student ID: MN3206K_10

Table of Contents

  1. Introduction
  2. Main Body
    • High Growth Potential Coupled with Volatility
    • Underdeveloped Institutional Frameworks
    • Cultural Diversity and Consumer Heterogeneity
  3. Conclusion
  4. Bibliography

Introduction

Emerging markets are a term that best describes economies in transition from a developing to a developed status and are very important in the global economic structure. These markets are characterized by rapid industrialization, urbanization, and increased incorporation into global trade networks, but their transitional nature provides unique challenges, such as economic volatility, institutional weakness, and cultural complexity.

It becomes important for MNCs to understand these features for expansion into such dynamic environments. This essay aims to provide an exact definition of emerging markets and analyzes three of the key characteristics: (1) potential for high growth, along with volatility; (2) undeveloped institutional frameworks; and (3) cultural diversity and heterogeneity in consumers. These features will be analyzed in light of their implications for MNCs, underlining the call for adaptive and locally-informed strategies.

Case studies in a wide range of industries show how firms have managed to handle or confront these challenges.The analysis delimits its boundaries by focusing on certain economies and industries where the emerging market characteristics are most pronounced. This essay avoids broad generalization, choosing instead a discussion that is nuanced and subtle with regard to managerial implications. Ultimately, it hopes to offer practical insights for businesses that are looking to do well in these complex yet promising markets.


Main Body

High Growth Potential Coupled with Volatility

Emerging markets are known to be very high-growth, which is usually precipitated by rapid urbanization, expansion of middle-class populations, and industrialization. Such economies include, for instance, China, India, and Brazil, which experience more GDP growth than developed nations frequently. This growth is coupled with volatility in its core, arising out of political instability, currency fluxes, and less stable regulatory environments.

Growth has presented great opportunities for MNCs, whereas volatility calls for multifaceted strategic planning against the risk involved. The primary attractiveness of growth potential in emerging markets is actually because consumers are largely untapped and have infrastructure opportunities. MNCs need to take a dual approach to growth and risk management (Paulino, 2021).

To leverage growth, firms have to invest in local production facilities, supply chains, and marketing strategies that fit the rapidly expanding consumer bases, including diversification across markets and financial instruments to hedge against currency risks. Unilever capitalized on the rising disposable incomes in India by offering affordable products to rural consumers, such as single-use shampoo sachets.

However, it also faced commodity price volatility and changed its supply chain strategies (Cheng, 2021). Volkswagen expanded its reach in China but faced regulatory change and competitive forces from locals, requiring it to be agile and unsteady (Che, Katayama, and Lee, 2023). A critical comparative insight arises from the balance between short-term gains and long-term stability.


Underdeveloped Institutional Frameworks

Frameworks are a defining characteristic of most emerging markets, featuring weak legal systems, corruption, and inadequate infrastructure. Such deficiencies pose significant operational and ethical challenges to multinational corporations, often impeding their ability to function with optimal efficiency and uphold global standards.

For example, the lack of an adequate enforcement mechanism for contracts or intellectual property rights in many of these regions makes a business vulnerable to counterfeiting or non-compliance by local partners. For MNCs to thrive in such environments, they should embrace institutional entrepreneurship, where firms actively participate in reinforcing local institutional frameworks.

This process usually involves collaboration with the government, NGOs, and local businesses to develop sustainable solutions (Kpoku, 2021). For instance, firms may invest in infrastructure improvements that not only benefit their operations but also promote community development. Engagement with policymakers can also help reduce ambiguity by setting clearer regulatory guidelines.

However, this needs to be balanced with strong internal compliance systems that ensure that international anti-corruption laws such as the U.S. Foreign Corrupt Practices Act or the UK Bribery Act are complied with. The case of Pfizer in India is a good example.

The widespread generic manufacturing of drugs also presented an intellectual property challenge, pushing the company to engage the policymakers to increase IP protection and revise their pricing strategies to not lose competitive advantage in a highly cost-sensitive market (Liu, 2022). Similarly, infrastructure inadequacies, especially in logistics, were highlighted by Amazon’s entrance into Brazil (Rodrigue, 2020). The company addressed these problems by investing in local warehousing and delivery systems.

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Cultural Diversity and Consumer Heterogeneity

One of the major characteristics of emerging markets is significant cultural diversity and consumer heterogeneity, due to vast differences in geography, language, and socio-economic conditions. Such diversity brings both challenges and opportunities for MNCs. While developed markets are often relatively homogenous, firms have to cope with a very fragmented landscape of consumers with different tastes, purchasing power, and values in emerging economies (Evan and Holý, 2023).

For MNCs, this diversity needs to be understood and addressed. Success is dependent on localizing products, services, and marketing strategies. Heavy investments in market research help firms understand regional preferences, and offerings can be tailored based on such knowledge. Local talent with cultural expertise and partnership with regional stakeholders can enhance cultural alignment (Abbaszade, 2022). Moreover, flexibility in product design and branding allows firms to cater to diverse consumer needs without alienating specific segments.

To solve the diversities facing MNCs, localized methods are essential for them. Firms will be forced to heavily invest in more research about cultural nuances of targeted demographics and work out region-specific strategies for the firms. Building on local partners’ relationships and employing culturally alert teams coupled with regional tastes and traditions can help them resonate across diversified audiences. Additionally, localized advertising will not only help raise brand loyalty and consumer confidence but also become strong in markets.


Conclusion

In conclusion, emerging markets are transformational but demand an innovative, ethical, and adaptable approach. The firms that will succeed are those that embrace this complexity. Emerging markets are inherently marked by the complex dynamics of both opportunities and challenges such as high growth potential that couples volatility, underdeveloped institutional frameworks, and cultural diversity require strategies that balance risks and rewards.

While these markets offer prospects for rapid industrialization coupled with the expansion of consumer bases, they also display an equally high propensity for economic instability, weak regulatory systems, and fractured cultural preferences. For MNCs, success in these regions is all about strategic agility and local adaptability.

High growth and volatility call for risk management and financial strategies to be able to offset such uncertainties as fluctuations in currency or policy changes. The filling of institutional voids goes beyond compliance, and active participation in enhancing local infrastructures and governance. In contrast, catering to different consumer preferences requires investment in market research and products or services tailored to the culture of the host country.

Examples of Unilever, Pfizer, Amazon, and Coca-Cola are the companies that prove that the firm that can exploit its global experience to local contexts is the best. The lessons learned from their experiences indicate that one needs to strike a balance between global aspirations and a sense of regional nuances.


Bibliography

  • Abbaszade, G., 2022. International Brand-Name Standardization/Adaptation. Available at: Link [Accessed 3 December 2024]
  • Che, X., Katayama, H. and Lee, P., 2023. Product-harm crises and spillover effects: A case study of the Volkswagen diesel emissions scandal in eBay used car auction markets. Journal of Marketing Research, 60(2), pp.409-424. Available at: Link [Accessed 3 December 2024]
  • Cheng, Y., 2021, February. Analysis on the Opportunities and Challenges of Unilever’s Differentiated Competition by Using SWOT and PEST. Available at: Link [Accessed 3 December 2024]
  • Evan, T. and Holý, V., 2023. Cultural diversity and its impact on governance. Socio-Economic Planning Sciences, 89, p.101681. Available at: Link [Accessed 3 December 2024]
  • Fernandez, M. and Joseph, R., 2020. Foreign direct investment in Indonesia: An analysis from investors perspective. International Journal of Economics and Financial Issues, 10(5), pp.102-112. Available at: Link [Accessed 3 December 2024]
  • Kpoku, O.K., 2021. Positive and negative influence of globalization on international business actors’ activity (on materials of Unilever Group). Available at: [Link](http://dspace.puet.edu.ua/bitstream/123456789/11137/1/Obed-Thesis-2020

.pdf) [Accessed 3 December 2024]

  • Liu, C., 2022. Beyond Compulsory Licensing: Pfizer Shares Its COVID-19 Medicines with the Patent Pool. NYUJ Legis. & Pub. Pol’y, 25, p.1. Available at: Link [Accessed 3 December 2024]
  • Paulino, I.G., 2021. Facing Mixed Performance from Emerging Markets Exposure with Acquisitions and Portfolio Reshaping. Available at: Link [Accessed 3 December 2024]
  • Rodrigue, J.P., 2020. The distribution network of Amazon and the footprint of freight digitalization. Journal of Transport Geography, 88, p.102825. Available at: Link [Accessed 3 December 2024]
  • van Schalkwyk, M.C., Petticrew, M., Maani, N., Hawkins, B., Bonell, C., Katikireddi, S.V. and Knai, C., 2022. Distilling the curriculum: an analysis of alcohol industry-funded school-based youth education programmes. PLoS One, 17(1), p.e0259560. Available at: Link [Accessed 3 December 2024]

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