bab 9

BAB 9.
EMERGING MARKET

In the emerging market economies, the key to international success will be an understanding of the fact that societies in transition require special adaptation of business skill and time to complete the transformation. Due to their growing degree of industrialization, other economies are also becoming part of the world trade and investment picture. It must be recognized that these global change will, in turn, precipitate adjustments in industrialized nations, particularly in the manufacturing and trade sectors. Adapting early to these changes can offer new opportunities to the international firm.

ECONOMIC CHANGE

For western firms, the political and economic shifts converted a latent but closed market into a market offering very real and vast opportunities. Yet the shifts are only the beginning process. The announcement of an intention to change does not automatically result in change itself. Highly prized, fully accepted fundamentals of the market economy, such as the reliance on competition, support the profit motive, and the willingness to live with risk on a corporate and personal level, are not yet fully accepted. It is therefore useful to review the major economic and structural dimensions of the change taking place in order to identify major shortcomings and opportunities for international business.

Firms doing business with transition economies often encounter interesting demand conditions. Buyers preferences are frequently vague and undefined. Available market information is inaccurate. As result, it is quite difficult for corporations to respond to demand. In emerging markets, consumption pattern can change rapidly. Companies that can anticipate these discontinuities can exploit them. The challenges to manager in emerging market is not restricted to the governmental front. The success of operations frequently rests on manager ability to compete effectively with unconventional competition such as product counterfeiters, product diverters, and informal competitors who ignore local labor and tax laws. To cope with all these challenges, transition economic need trained managers.

ADJUSTING TO GLOBAL CHANGE

Both institutions and individuals tend to display some resistance to change. The resistance grows as the speed of change increases. It does not necessarily indicate a preference for the earlier conditions but rather a concern about the effects of adjusment and a fear of the unknown. Major shifts have occurred both politically and economicallyin central Europe and the former Soviet Union, accompanied by substansial dislocations. Therefore, resistance should be expected.

STATE ENTERPRISE AND PRIVATIZATION

Often the international manager is also faced with state-owned enterprises that have been formed in noncommunist nations for reasons of national or economic security. These firms may inhibit foreign market entry, and they frequently reflect in their transactions the overall domestic and foreign policy of the country rather than any economic rationale. The current global trend toward privatization offers new opportunities to the international firm, either through investment or by offering business skills and knowledge to assist in the success of privatization. Through privatization, budgets can reduced and more efficient – non fewer-services can be provided. Privatized good and services are often more competitive and innovative. Two decades of experience with privatization indicate that private enterprises almost invariably outperform state-run companies.

INTERNATIONAL BUSINESS CHALLENGES AND OPPORTUNITIES

Challenges

1. One major difficulty encountered is the frequent unavailability of convertible currency. As result, many countries resort to barter and countertrade.
2. Lack of protection some countries afford to intellectual property right. Unless importers can be assured that government safeguard will protect their property, trade, and technology transfer will be severally inhibited.
3. Attempting to source products from emerging market. Many firm has found that selling is not part of economic culture in some countries.
4. The quality of the products. Therefore, the international manager must require manufactures to improve quality and offer prompt delivery using advanced information technology.

Opportunities

1. Some transition economies have products that are unique in performance. While they could not be traded during a time of ideological conflict, they are becoming successful global product in an era of new trade relations.
2. The most sourcing opportunities are for industrial products, which reflects the past orientation of research and development expenditures. Overtime, however, consumer products may play a large role, sometimes even a surprising one.
3. Technology transfer are also substantial opportunities to provides quite useful information.

Why The Mutinational Firms Have higher rate success in transition economies?

1. Foreign firms have had a tendency to enter- at least initially- services sectors that allowed high profit potential with minimal capital investments. This permits a first stage entry of little capital risk.
2. As multinational firms gain experience and knowledge of the local markets, they may then increase the size of their capital investment.
3. The export orientation of the multinational firm is quite consistent with the economic policy goals of many economies. They are often sorely in need of export earnings.
4. Many multinationals quickly find their access to local capital through the rapidly developing domestic financial sector to be easier.
5. As multinational firms mature in transition, many find that the domestic market itself represents a legitimate market opportunity on a stand alone basis. Although this is the commonly assumed goal of privatization, it is not always achieved.