Entry into Emerging and Developed Markets

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Entry into Emerging and Developed Markets

Table of Contents

Introduction
Differences Between Emerging and Developed Markets
Essential Factors to be Considered
Conclusion
References

Introduction

Improved productivity and changing consumer needs have motivated many company owners to globalize. Top executives of large firms, particularly in North America and Europe, recognize that internationalization is the most significant challenge they confront today. Nonetheless, most companies have remained committed to the strategies they have used in the past, which prioritize uniform approaches to developing markets regardless of regional variations. Consequently, many multinational firms find building strategic entry approaches in emerging markets challenging. Although emerging and developed markets provide growth opportunities, they have to be approached strategically to capitalize on present needs without jeopardizing companies future relevance in the same markets.

Differences Between Emerging and Developed Markets

One of the key distinguishing points between developing and developed economies is the level of trade. In a developed market, the environment is such that each actor has established their presence, setting the benchmark for quality and pricing in the market (Luo et al., 2019). Developed markets are characterized by stiff competition and strict regulations (Luo et al., 2019). Since every business executive knows the rules, they have to enter developed markets with caution because significant losses may be experienced in case of insufficient planning. For this reason, entering developed markets is riskier and demands higher initial investments than emerging markets.

Developing markets are mainly found in developing economies such as China, where some markets are still unexploited and the market demand is relatively high. According to Prystupa-Rzdca et al. (2019), many companies fail to enter emerging economies due to ineffective strategies, mostly related to the pricing and consumer preferences. Although the costs of investing in emerging markets are considerably low, such regions require careful market analysis for optimum profitability. Unexploited markets present little competition and high growth potential.

Essential Factors to be Considered

In each type of market, critical factors determine a companys success or failure. In developed economies, branding is vital as it distinguishes a companys products, enabling it to compete with other established firms. Since developed economies are highly regulated, it is crucial to understand local and global business practices and corporate rules enforced in those markets (Luo et al., 2019). Socio-political, environmental, and financial policies are essential in this case. According to Mazur and Mazur-MaBek (2018), Coca-Colas entry into the EU market has been successful because of its branding strategy and dynamic operations. Although the company encounters stiff competition, it has managed to stay ahead of competitors because it is always capitalizing on new technologies to meet changing customer preferences.

Emerging markets can be more challenging, especially when there are no competing firms from which to gather information regarding the market. Culture is a critical factor in developing economies because it influences customer reception of the brand, thereby determining a companys growth in the new market (Prystupa-Rzdca et al., 2019). It is also essential to research the peoples economic status to tailor the products prices according to their purchasing power. Colgate-Palmolive is one of the major companies in China whose product relevance, company culture, and pricing have given it a competitive advantage over similar firms (Siripipatthanakul & Sixl-Daniell, 2021). Essentially, the entry strategy into a market determines how the brand is perceived and influences company growth.

Conclusion

In conclusion, developed and emerging markets require different approaches. Companies need to consider the set regulations and competition for successful operations in a developed market. Since emerging markets are characterized by little competition and market availability, investors need to understand the peoples culture to tailor their products accordingly. A companys entry strategy determines whether it will dominate the market or not. Research is crucial for entry into both developed and emerging markets.

References

Luo, Y., Zhang, H., & Bu, J. (2019). Developed country MNEs investing in developing economies: Progress and prospect. Journal of International Business Studies, 50(4), 633-667. Web.

Mazur B., & Mazur-MaBek, M. (2018). Corporate wellness: The case of Coca-Cola Poland Company. International Journal of Contemporary Management, 17(2). Web.

Prystupa-Rzdca, K., Lupina-Wegener, A., & Johannot, C. (2019). Lessons learned from Swiss-born globals entering Brazil. Journal of Entrepreneurship in Emerging Economies, 12(1), 125-143. Web.

Siripipatthanakul, S., & Sixl-Daniell, K. (2021). Strategic management in oral care product market: A case study of Colgate-Palmolive (Thailand) Limited. International Journal of Trend in Scientific Research and Development (IJTSRD), 5(5), 851-865. Web.

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