ipott economy in emerging markets

8/3/2019 iPOTT Economy in Emerging Markets

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4/2/2012

Economy in emerging markets

Having looked at importance of globalization and the efforts

taken to gain cultural sensitivity to reduce chances of initial

failure, it is now time to understand the economic factors

influencing the desire to expand in globe. Why would any

company choose to globalize in a particular country? What

makes it stand out of the crowd? We aim at gaining an insightinto these questions in this article.

The International Journal of Emerging Markets indicates that

emerging markets such as Brazil, Russia, India, China and

South Africa account for 20% of the worlds GDP and two-

thirds of worlds population. With the IT market improving,

technological advancement resulted. This has led to India

having a vast pool of resources that are highly skilled. India

which initially served as a low-cost labor provider is now being

targeted as a resource-rich country. It is estimated that 70% of

the worlds growth will come from emerging markets and 40%

of that is accounted for by India and China.

With the tremendous growth, many local companies that

previously offered no competition are now major competitors

to transnational corporations. The shift of economic power to

emerging markets has led to many transnational firms that are

already established in India to initiate activities to acquire a

share in the growth. The symbiotic relationship between

global economies are so tightly interconnected due to these

exchanges that governments and industries will have tocooperate their ways to adapt to these evolutions.

Looking at it from economic perspective, the key factors

driving this change need to be identified. This is necessary to

introduce changes in business strategy to reflect localization.

It is quite obvious by now that the biggest factor driving

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economic changes in emerging market such as India ispopulation growth. Increase in their urbanization and the

growing divide between youth and aged has created space for

large fraction of people who are skilled and eligible to work.

The recent recession has strengthened relationships between

local companies and government further as new initiatives

have been launched to enable better connectivity, which has

attracted more interest thereby creating gradual balance in

global economic power. It is obvious that the emerging

markets will soon create space for new entrepreneurs who are

identifying gaps in market for services targeting low-income

consumers all over globe. Internet marketing and e-commerce

has led us into a new era. Disruptive innovation is now a

common trend in emerging markets.

It is quite probable that the growth will result in winners and

losers. What decides winning factor in emergent companies in

the current context? Entrepreneurs will have to look outward

as adaptations in technology and regulatory changes are

inevitable while introducing a new product and creating a

global market for it by adopting global workforce. Adaptations

to external environment and embracing technology to reflectthese changes are critical to remain trendy and visible. Supply

chain management will play a critical role in the way goods are

packaged and priced reflecting changes in raw-materials price

fluctuations and labor cost structures. The trend is further

influenced by national governments trying to reduce cost

structures and focusing on growth agendas. With the advent

of cleantech ideas emerging companies have started

incorporating green transportation, renewable energy,

recycling, green chemistry and other energy efficient

appliances right from initial stages to gain a Competitive

advantage in long run. According to Ernst and Young, by 2020,

Brazil, Russia, China and India are expected to account for

nearly 50% of all global GDP growth. This has created scope

for high investment activities by investors who are trying to

secure a strong base here.


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In the next issue we will be discussing more about Economicfactors driving changes in IT product development industry in

India and how this influences Corporate Strategy.

ipott economy in emerging markets

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