Importance of Emerging Economies

• What are emerging economies?

  Developing countries with rapidly growing economies and increasing industrialization
• Why are emerging economies important for business?

  • New growth opportunities
  • Off-shoring - cheaper production cost
  • First-mover advantage
  • Strategic alliances in the emerging economy
• Why do emerging economies provide new growth opportunities?

  Rising middle class means that there is an increase in disposible income meaning new customers to sell to
• Why are there lower production costs in emerging economies and why is this important?

  • Lower labour costs and fixed costs reduce manufacturing costs
  • Enables competitive pricing globally
• How can a business get a first-mover advantage when entering an emerging economy?

  An early entry means that there is a stronger market presence, loyalty and brand recognition before rivals
• Why might a business decide to do a strategic alliance when entering an emerging economy?

  Companies partner with local firms to navigate the legal environment and gain local knowledge
• What are the risks of entering an emerging economy to the business?

  • Political instability
  • Weak legal protection (e.g. IP theft)
  • Infrastructure challenges
  • Cultural differences may create marketing/HR issues
• Why might poor infrastructure in emerging economies be a challenge for a business?

  • Delays in the supply chain (e.g. raw materials, product delivery)
  • Higher logistics and transportation costs