What means by emerging markets?
Emerging markets describe the countries that are in the stage of rapid development and industrialization. According to Li (2011), those countries are restructuring their economies, shifting steadily from planned to market economy, in order to create wealth and knowledge transfer. The meaning of “Emerging markets” is similar to “Developing countries” or “Less-developed countries”. Different organization has different method to delineate which country belongs to emerging markets. Jain (2006) suggested that there are around thirty emerging markets in the world (p.384). As suggested by the World Bank, China, India, Indonesia, Brazil and Russia are the five largest emerging markets in the world.
What are the Brand and Positioning Strategies for a firm?
In the corporate aspect, brand strategies involve a long stage, i.e. from the design of the products to the selling of the products. Therefore, products and target customers are our major focus. Positioning is critical to the success of a company. So, branding strategy, research & development and project management strategy are three important areas to be discussed.
How does it related to globalization?
The openness of the less developed economies is smaller than those advanced economies. Most of their firms are state-owned and the always monopolize the market. Those firms are big and without competition. When the country is a closed economy, there are little firms to complete in the market. Therefore, innovations and efficiency are low. With the opening up of the country’s market due to globalization, more foreign firm entered into the market. As these local firms don’t have sufficient experience and product quality, they are difficult to complete in the market. Not about the foreign market, even the local market share couldn’t be maintained. Therefore, the local firms should restructure and shift its strategy in order to react to this competitive market.
Strategy for the firms in the advanced economies
Due to globalization, companies in the advanced economies are expanding their business towards developing countries in order to enjoy economies of scale through mass production. At the same time, they are also searching for methods to reduce their cost. One of the important methods is the multi-point production. They usually design the products in their head office near the universities of their own country. Then, they will outsource their production line to the less developed countries like China and India. This method will also benefit the less developed countries and reduce the tax as well as transportation cost for those multinational corporations. It is easier for them to enter the emerging market. This is the major model for the advanced economies companies.
Tranforming from Conservative to getting involvement in international trade - Positioning and methods of operation for the companies in the less developed countries
In the other way round, those companies in the less developed countries are more likely to have joint venture and manufacture products for those companies in the advanced economy for the following reasons:
(1) Technological Transfer by Join Venture
Most emerging market firms do not have sufficient technologies to handle technical issue, especially for those hi-tech and electronic firms. The firms in Bangalore, India concentrated a lot of IT companies. Some of the companies cooperated with giant transnational IT companies like HP, Microsoft, etc. The automobile companies in China usually set up joint venture with some American and Japanese based car companies. China FAW Corporation set up joint venture with Toyota; Dongfeng Automobile Corporation of China also cooperates with Nissan Group; Shanghai Automobile Industry Corporation also has joint venture with the General Moto of the U.S and the Volkswagen. By doing so, the Chinese companies captured many important production methods as well as technological breakthrough.
(2) Learning the corporate structure and governance by introducing the foreign strategic shareholder
In the developing countries like China, most of the companies are state-owned. Their structure is inefficient as well as non-profit orientated. In order to catch up with the market, some of the state owned companies have to learn from the west. For example, state owned banks in China like the Bank of China, Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China started to go public and introduce strategic shareholders like the UBS, Goldman Sachs, Bank of America, etc. In this sense, their operations turned into the Western mode with the combination of Chinese features like the appointment of Chainman and CEO.
(3) Better ensure of market due to foreign brand
When a company in emerging economy manufacture a product, it is difficult for her to sell it in the market. She doesn’t have any fame and the quality perception by customers is bad. Nevertheless, putting the foreign brand logo in its products will ensure the sales. Although the value added for that firm is small, it is more important for them to have exposure. Therefore, those company’s sales will improve steadily.
Problem Created Under This Operation Model
(1) Labor Exploitation and Low Value Added
Emerging market firm usually give people a low cost and cheap labor impression. Foxconn, one of the biggest electronic manufacturing companies in Taiwan, set up several huge factories in China. The most famous client for Foxconn is Apple. It manufactures iPhone and iPad for Apple Limited. However, it can just earn USD$3 for each iPhone product and USD$5-$7 USD produced. Foxconn can just earn USD$3 per iPhone manufactured, how can you image how much the workers could earned. Fourteen workers in Foxconn committed suicides in 2010. In this way, those companies in emerging market cannot earn “Big money” as most of the profits were captured by foreign firm. They are just utilizing the human and natural resources in the emerging market.
(2) Lack of Independency and Rigid Decision Making
When the emerging market firm operates under joint venture or even introduces strategy shareholders, the company is partly controlled by the foreign company and the decision marketing is very rigid. It is because the foreign companies are aggressive in control the operation of those companies and hinder the dependency as they don’t want to have competition. The technological skills may also be secretes and not be allowed to produce some part in emerging market. Even if the Chinese firm knows the technology, the technical skills are protected by the patent of foreign firms. They are not willing to share the patent and the Chinese firms have to pay those companies a large sum of money in order to use the technology to make their own products. Let’s take the GAC Group of China as an example. It is a state-owned automobile manufacturing company who has joint venture with Toyota and Honda. It planned to go public in 2002. Toyota opposed to inject the jointly owned company to the listing company. Due to the opposition of Toyota, GAC Group have to get sufficient shares and borrow the listing state of its subsidiary Denway Automobile in order to raise fund in the stock market and go listing. It takes eight years for GAC Group to go listing.
The Second Revolutionary shift for the Firms in Emerging Market after the World Financial Tsunamis
After the world financial tsunamis, many firms in the advanced economy are short of capital. Some of the firms in the U.S. have to seek for help from the Federal Government like the General Motor, Bank of America. Together with the problems I mentioned before, the emerging market firms become more aggressive in expanding this international market as well as removing the control from foreign companies.
(1) From manufacturing products for foreign firms to self-determined brand
The emerging market firm started to put many efforts in advertising. They started to improve its own brand image. Like the Li Nng Sport Company, it widely sponsored the Chinese national team during Olympic Games in 2008 and it is going to make use of the fame of Chinese national team to create brand image and enter oversea market. BYD, one of the biggest electric car manufacturing companies in China, like to use its own brand to enter into the Russian and Korean market in 2011. By doing so, the companies in emerging market and capture the highest profit in the whole chain of production.
(2) Moving from Market follower to Market Leader through Research and Development
Under the circumstance of globalization, the competition of organizations in the world, especially in developing countries, is increasing sharply that companies needs to use different kinds of manners to survive which can balance different aspects, such as polity, economy and society. ‘Most of the many versions of globalization discourse focus on a recent qualitative transformation and emphasize the unique qualities of the new stage, while the longer view sees recent changes as part of a much older process of capitalist development and expansion in which there are important continuities as well as changes’ (Christopher, 19980). Organizations want to maintain the quality and competitiveness of their products or services that it can increase the loyalty and the number of customers. How to achieve this goal? Companies should change their strategies from normal to special mode which has a change constantly to satisfy the increased needs of customers and has ability to compete with other companies. Organizations need to implement different measures in order to increase the competitive advantages, and R&D plays an integral role that it can help companies create and reform products and services and develop the future direction of companies.
What is R&D?
‘Research and Experimental Development comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this knowledge to devise new application.’ This is the official international definition of R&D. Organizations develop new products or services to improve and expand their operations and future growth. ‘Creativity involves a large number of people from different disciplines working effectively together to solve a great many problems’ (Catmull, 2008). Those companies need a R&D team which helps those designs new products.
The trend of R&D
The level of R&D in one company can show the competitiveness of the company. Some famous corporations in the world treat R&D as the life of company that they all make the huge investment in R&D. According to some findings, the expense of R&D of General Motors (GM) was 6.5 billion US dollars in 1996 which was 5.6% of total sale and Lucent used 4.2 billion US dollars which was 11.6% of total sale. Therefore, it can be seen that R&D is essential for business growth which many corporations are focusing on.
The difference between emerging market firms and advanced economy firms
In bygone days, emerging market firms did not have sufficient fund and technologies for research and development. They always relied on the support of foreign firms and shared their knowledge. Emerging market firms became passive as the foreign firms have the rights to decide which knowledge should be shared and which should not. With the raising power of the emerging market firms, they are willing to do research and development for their own.
Specialized University ensure better Supply of Human Resources in the emerging market
The firms in advanced economy usually cooperate with some sound university. For example, HP and Microsoft are cooperating with Standford University in conducting research. However, there are several problems to cooperate with those universities. First, they could not make sure that the graduates could work for their companies after graduation as they are free to choose which organization they could work for. Second, those universities are not specializing in particular industry. That means, graduate have conceptual skills but not technical skills. Due to this problem, the emerging market firms have another idea. They set up their own universities and teach them technical skills. By doing so, they can provide on job training as well as injecting corporate culture to their students. They can also guarantee a graduate job for their students and it leads to a win-win situation. Take the Geely Holding Group of China as an example, it set up the Beijing Geely University, Geely Automobile Engineering Research Centre, etc. Petro China is also subsidizing the China University of Petroleum. Most of its graduate was worked as the technician as well as management broad members of Petrol China, CNOOC and Sinopec Corporation of China. By doing so, those companies in the emerging market firms could have a better human resource supply as well as maintaining company secret as they would not need to afraid if the data sent to partner University are being stolen by the other staffs.
Revolutionary Shift in Research and Development
In the past, most of companies in developing countries focused on manufacturing in their business, such as China. However, they change it from manufacturing to design and development recently. This is because they notice that they will be washed out in the future if they do not have change to give chase to the trend of the global market. Both the public and private companies put the increasing investment significantly in basic science and research that they understand companies need to become knowledge-based industries. And there are many supports in their countries, such as good supply of trained scientists and public and government support for science. For example, China is studying to produce GM rice which requires using new technology to help solving the problem of foods. It can show that China has put more and more investment in technology to create new things.
In some developing countries, corporations are focusing on R&D in recent years. For example, corporations in China spend huge money in R&D. Local companies recognize the importance of R&D in the future trend and set up the R&D centers one after the others. Costs is one of the advantages companies can get when they development their business. Daniel Q Zhu, director of China Engineering, Communications & Industrial Solutions at TE, said that they were developing cost-conscious and customized products for the domestic market and cost-efficient and equipped with advanced features for export. That means those companies can use lower costs to design and investigate new products comparing to western companies. It can help those companies increase the competitive advantage and earn more market share all over the world.
Another shift in strategies is that companies do not only product the goods to local customers, and they also create new products which will be shipped to other countries. Because of globalization, companies need to design products which can be suitable to satisfy the needs of foreign customers to expand the markets from local to international. Companies should make this change to maintain the business and compete with other companies. Moreover, the products should be new and different from the existent products to attract more new customers. For instance, a local company creates 3D social network which is the first 3D network in the world. It shows that companies need to implement different strategies in order to be successful in the global market.
R&D and management
Even though one company invests a lot of money in developing R&D, they do not guarantee to have equal return. This is because there are many factors which may affect the success of implementing the measures. One of the important factors is management. Implementing the project of R&D includes a lot of management issues in the long term. For example, the company needs to have good practices in human resource management. The company should assign the right person to take charge of R&D that makes sure staff understands how to take action to cooperate the strategies of the company. Moreover, there is some staff coming from different countries in this global market, so managing the staff relationship is quite important thing the company needs to focus on. ‘Getting work done through others requires a free flow of accurate information and open, productive relationship with employees. But that’s easier said than done in a diverse workplace where many cultures collide’ (Gardenswartz & Rowe, 2001). If there are some conflicts in the working environment, it will make the business decay. Thus, good management practices are essential to corporations to implement the R&D projects.
R&D and Marketing
The relationship between R&D and Marketing is extremely important that developing a new product which will be popular needs the cooperation of these two departments. When R&D department creates and produces new products, they require the information provided by marketing department to understand the needs and trend of the market. On the other hand, if the product designed by R&D department does not sell, it will affect the performance of marketing department. Therefore, it require these two departments to work together effectively in order to ensure the product is can be sell. To solve this problem, companies could set up a team which is responsible to help these two departments cooperate. This team receives the information from different departments and sends to other departments. It can make sure that the products can satisfy the needs of customers and performance of departments.
(3) Changing Project Management
Thanks to globalisation, many new way of management practises have arisen over the past few decades. To name a few, they include crisis management, talent management, project management, quality management, green supply chain management. We would just focus on project management and talent management in this blog.
(a) The emergence of project management
Due to globalisation, the world becomes interdependent. There are more cooperation between departments, firms and nations through partnership, mergers, joint ventures, strategic alliances and acquisition. Traditionally, workers only work in his/her own department. However, now employees have more opportunities to work with other people from other discipline through projects. So, project management is a new topic which management need to aware nowadays.
Comparison between traditional workforce management and project management
Traditional organizational structure
Traditional bureaucratic structures, there is a tendency to increase task specialization as the organization grows larger. In grouping jobs into departments, the manager must decide the basis on which to group them. The most common basis, at least until the last few decades, was by function. For example, all accounting jobs in the organization can be grouped into an accounting department; all engineers can be grouped into an engineering department, and so on. The size of the groupings also can range from small to large depending on the number of people the managers supervise. The degree to which authority is distributed throughout the organization can vary as well, but traditionally structured organizations typically vest final decision-making authority by those highest in the vertically structured hierarchy. The jobs in the traditional organizational structure usually are grouped by function into departments such as accounting, sales, human resources, and so.
Basic project management process
The objectives of a project are to sustain the long-term partnership, increase the chance to achieve successful and fruitful partnership which consequently increases the project performance. A successful project management involves applying long-term (strategic) planning through proper risk allocation in addition to short-term planning (management) approach.
One case study of using project management is the infrastructure (toll way) project under public-private partnership in Indonesia. They have to build Jakarta-Bandung corridor. In this globalisation era, the private sector has been playing an active role through involvement in delivering public services to enhance infrastructure development, especially in the developing countries. In the rapidly developing countries such as the countries in the East Asia region, concessions as well as build and operate agreements for large-scale infrastructure networks have been the main interest. As such, public-private partnership is inevitable which requires large-scale project management.
Globalisation has affected the practices of human resources management a great deal. It has resulted in the term “Integrated talent management” directly. First, globalisation causes the transport costs keep falling which increases the mobility of workers, especially the elites. They can choose the most attractive jobs they want free from the geographical barriers. Besides, the intensification of competition in global markets forces organization especially multinational enterprises to fight for talents from all around the world. So, the demand for superior talents far outweigh supply, and more and more companies are feeling the impact as they compete in the global market (Frank & Taylor, 2004). Globalisation, workplace reform and changes in the demographical composition of the workplace have affected how talent needs to be managed (Nankeevis, Compton & Baird, 2005). The growth potential of organizations worldwide depends on the ability of companies to have the right people, in the right place at the right time. They understand the competitive value of talented people and spend considerable time identifying and recruiting high calibre individual wherever they can be found.
Let me explain the general concept of Integrated Talent Management. Gaining agreement about the definition of ‘talent’ is a vital first step in being able to manage that talent well. According to Conference Board (Morton, 2005), ‘talent’ refers to individuals who have the capacity to make a significant difference to the current and future performance of the company. This definition emphasis the need to include not only a view of how employees are performing now, but also capacity to perform in the future to meet new commercial demands.
Therefore, managing talent should be about identifying, attracting, integrating, developing, motivating and retaining key people across the whole of the business, not just the ‘elite few’ decision makers, as is so commonly the case. Talent management activities can include performance management, succession planning, talent reviews, developing planning and support, career development, workforce planning and recruiting (Heinen & O’Neill, 2004).
Conclusion
Reference:
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