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Success in Emerging Markets Takes Tactical and Strategic Approach

Over the last few years, the conventional wisdom has coalesced around a view that success in emerging markets is primarily a function of outstanding execution - speed, opportunism, tenacity, and guile - instead of a well-thought-out strategy supported by a set of winning and difficult-to-replicate organizational capabilities. In other words, street smarts are supposed to beat MBA smarts every time.

While the romantic notion of emerging market underdogs beating villainous multinationals clearly appeals to many, is it actually true? Did emerging market giants, such as Bimbo and Haier, succeed largely due to their executional abilities and without the benefits of a solid strategy and differentiated capabilities? The answer is no. In fact, the conventional wisdom does great harm to aspiring emerging market companies by persuading them that relying on execution alone is enough to succeed.

The reason is that emerging market companies embody an important contradiction. They’re not only early movers in nascent domestic sectors, but they’re also typically latecomers to globally mature industries that are dominated by world-class competitors that have been honing their capabilities for decades. To succeed not just in global markets but even at home, emerging market companies must combine their traditional advantages—the vision, risk tolerance, flexibility, and speed needed to capture early-mover gains—with a relentless focus on developing the capabilities required to catch up with world-class competitors elsewhere. In other words, emerging market companies must master a new form of strategic and organizational ambidexterity that goes far beyond execution alone.

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Keywords: developing world, foreign direct investment, emerging markets, business strategy, supply chain management

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