An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market. This includes countries that may be developed markets in the future or were in the past. Many businesses may feel that it is most effective to target an emerging market to increase and maximise profits because the market can become loyal to the brand, making the market more sustainable.
When a business expands into an emerging market, there is the opportunity to become part of an economic system that is still forming. Deloitte, a worldwide financial firm, notes that companies in emerging economies must expand capacity and capability. As large companies build power plants, roads and dams, other businesses step in to provide the locals with the goods and services they need. As the region's economy develops, the businesses that open up shop ...view middle of the document...
Small businesses especially may have opportunities to grow in emerging markets not available to them in domestic markets. For example, Procter & Gamble identified the needs of male consumers in areas with scarce water supplies and designed grooming products for this group in multiple markets. Within three months of launch, one shaving product became the best-selling product of its kind in India.
A disadvantage of trying to do business in emerging economies is the challenge in overcoming cultural risks. Cultural perspectives, rituals and product usage vary around the world and when new economies emerge, they may have different expectations than ones in which a business is established. A UK business, for instance, may struggle with understanding how to do business in China and Brazil, among the faster-developing markets in the early 21st century. These challenges increase for smaller companies with fewer employees and resources. An example of this is Tesco moving into china. It did not account for the cultural changes when making the decision to move, and so it was a big fail, losing the business a large amount of profit.
Emerging countries often have less evolved legal and ethical protections, forcing businesses to risk encounters with criminals or crooked law enforcement agents. Stealing or scrupulous business transactions are common, but violence and even murder can happen in some countries. Similarly to this, natural disasters can have a lasting and devastating effect on business that target emerging market, as these countries are often more prone to natural disasters and political upheaval.
In conclusion, an emerging market is the best way to achieve major growth in profits, as they create loyalty, therefore becoming an integral part of that market, increasing sales in the long term. However, this depends upon external factors such as the state of the market and the ay the business handles this. If the business manages these well, they can succeed in an emerging market, if they do not they could fail. But overall, it is the best way to achieve major growth in a businesses profits.