Largely, this has caused mass confusion, and little or no growth for many industries. What should businesses do in order to take control of their company growth? The first step is to forget the hype surrounding First World economies; there is little to no growth in these markets. The second step is to move outside of the company comfort zone and begin to consider emerging markets as the next blue ocean.
Many of the world's fastest growing economies reside in Africa, Asia, and South America, not in North America or Europe. In many of these markets, burgeoning demands for high-tech products as well as consumer products exist. For non-product companies, many of these markets still need professional business and personal services. Some of these service lines include, but are not limited to the following:
- Security
- Information Technology
- Financial Services
- Logistics
- Capacity Building and Training
- Infrastructure Support, and
- Many Others
Many of these growing markets also need technology, management, and other products and services in order to bring their natural resources to market.
Further, many of these countries are great places for outsourcing. Some locations offer business friendly terms in order to attract foreign companies looking to outsource labor and other functions. While some unpleasant stigmas surround outsourcing, the unfortunate positions many First World countries are finding themselves in leaves businesses few other options if they are to continue growing.
When considering an emerging market, decision makers will often hesitate due to "associated risks," and inadvertently miss the larger picture. Various large, risk averse corporations have been conducting business in these locations for many years. One notable example is IBM. IBM has been doing business in Africa for 50 years and has invested over $300M USD in their African growth in the last 5 years. What is it that these companies seem to know that others do not? Simply, it is that the business environment is changing rapidly and many First World countries simply cannot keep up anymore. Steve Wynn's recent decision further accentuates the inability of First World countries to compete as their economies continue to contract. Now, as a result of advances in technology, smaller and mid-size businesses find themselves able to access these markets and increasing the potential to create their own blue oceans.
While mitigating the risks of expanding into emerging markets is possible, companies should not blindly pull out a world map, point to a random country and begin the expansion process. Companies need to come to terms with the level of risk they are comfortable shouldering as well as the ideal locations for their specific products or services. Additionally, companies need personnel and resources that understand these environments, how to conduct business there and how to mitigate potential risk when working locally.
Unfortunately, most small and mid-sized businesses do not possess the in-house resources necessary to effectively qualify potential markets and navigate the various legal and cultural hurdles that can hinder growth and expansion. Companies can augment their in-house resources by engaging outside business development consultants or through hiring personnel that specialize in these markets to assist in building their development strategy as well as in successful implementation of that strategy. Some firms specialize in specific markets and provide the expertise and understanding of the local conditions necessary for successful market entrance. Additionally, they can advise on the viability of one market/country over another for specific products or services within their geographical area of expertise. Further, they are also capable of making introductions to potential partners and vendors.
Overall, the potential for growth and Return on Investment in these emerging markets outweigh many of the unfounded risks that companies often associate with doing business in these countries. Companies' that intent on expanding and growing both their revenue base and profits must look to these new markets in order to find real, sustainable growth.
First Published on Ezine.
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