Question

GLOBAL AND BUS PRACTICES 3000-CTW

Chapter 8. Understanding Emerging Markets integrates many theories and concepts that we discussed before. It focuses on how these concepts apply in practice in the context of emerging markets. As a reminder, the learning objectives for this chapter are:

8.1 Understand advanced economies, developing economies, and emerging markets.

8.2 Know what makes emerging markets attractive for international business.

8.3 Learn how to assess the true potential of emerging markets.

8.4 Evaluate the risks and challenges of emerging markets.

8.5 Learn the success strategies for emerging markets.

8.6 Understand corporate social responsibility, sustainability, and the crisis of global poverty.

The discussion Questions are below.

1. Give examples of : Advanced economies, developing economies, and emerging markets

2. Why are emerging markets attractive for international business?

3. What are some of the risks and challenges of emerging markets?

4. Give examples of strategies for entering emerging markets

/END/

Answer 1

1) example of -

Advance economies-The richest countries. Australia, Canada, Japan, the United States, and nations of western Europe.

Developing economies-Bangladesh, Bolivia, and Zaire

Emerging markets-Indonesia, Mexico, Poland, and Turkey

2)Emerging markets are attractive for international markets because-

Emerging markets like India, and China presents some of the most unexploited markets. These markets offer international companies opportunities for growth through their ready market and available labor. The emerging markets also present the international companies with a permissive and well structured markets market, with friendly business environment. As a platform for manufacturing, they present the best infrastructure for manufacturing as the raw materials are not fully exploited and then infrastructure is available. On the other hand, as sourcing destination, the emerging market presents the cheapest, competent and ready labor forces. All international companies would like to establish their officer because of the friendly laws, ready market, cheaper labor force and competent staff who are knowledgeable in wide range of disciplines.

3)some of the risks and challenges of emerging markets-

• Political risk- Emerging markets may have unstable, even volatile, governments. Political unrest can cause serious consequences to the economy and investors.
• Economic risk- These markets may often suffer from insufficient labor and raw materials, high inflation or deflation, unregulated markets and unsound monetary policies. All of these factors can present challenges to investors.
• Currency risk-The value of emerging market currencies compared to the dollar can be extremely volatile. Any investment gains can be potentially lessened if a currency is devalued or drops significantly.

4)Give examples of strategies for entering emerging markets-
Listed, in order of risk (low to high):

1. Export/Import Business
2. Licensing
3. Franchising
4. Strategic Alliances
5. Joint Ventures
6. Foreign Acquisitions
7. Wholly-Owned Subsidiaries