Being first to a new market brings huge first mover advantages, in that a company gets a chance to establish market presence before its competitors. However, there is also the downside risk of committing scarce resources to an untested market and essentially taking a ‘bet’, that hopefully will result in a profitable revenue stream.
Fifteen years ago it was Eastern Europe, ten years ago it was the BRICs, if you are an organisation planning an international market entry strategy – it can really pay off to know –
Where are the next emerging markets going to be?
The ‘bet’ taken by companies that pioneered their way into the BRICs over the last decade has, in many cases, paid dividends. These huge markets are now a standard element of many companies’ growth strategies. With their large demographic bases and rising incomes, they will continue to be an attractive source of revenue.
However, the BRICs are not without their challenges. For example, despite the extra revenue generated by the recent World Cup, most economists are predicting GDP growth in Brazil of little more than 1 per cent for 2014, less than the growth rate of many developed countries. In fact some economists are even talking about the possibility of a technical recession.
Despite these challenges, companies will continue to grow their presence in the BRICs and exploit their huge market potential. So now that most companies have an awareness of the opportunities in the BRICs, what is the next wave of countries that will offer that all elusive first mover advantage?
Respondents to the 2012 EY globalization survey of 800 CEOs from around the world, believe that the most attractive emerging markets outside of the BRICs are Indonesia, Turkey, Mexico and South Africa. The reasons given, include access to nearby markets, political stability, and transport and technology infrastructure. Many of these markets also show consistently high economic growth close to that of the leading BRICs. For example, Turkey, Mexico and Indonesia closely shadow China and India in terms of GDP growth from 2000 through 2015.
Is it time now to develop a quirky acronym for the next wave or should we wait until it reaches its crest?
As it stands, South Africa is often slipped into the BRICs acronym athe ‘S’. In fact the BRICS summit includes South Africa, along with the other four developing nations. So if these emerging countries develop into the next wave, what will they be called? How about the TIMs (Turkey, Indonesia, Mexico, and/or South Africa) or maybe even the MITs (Mexico, Indonesia, Turkey, and/or South Africa)?
Regardless of where this next wave comes from there are key capabilities that you can be building up now in your organisation to take advantage of the emerging new markets. These international business capabilities apply not just in your sales and marketing department but across all the functions of your organisation.
Want to know if you’re ready? Ask yourself and your team the five questions below..
- Do you have a sales pipeline process that takes account of the optimum approach for market penetration?
- Can you critically analyse your potential customer’s buying process and do you know how to deploy the appropriate marketing and sales response for market penetration?
- Can you apply macro and industry research capabilities to inform strategic decisions?
- Do you understand the cultural and communication challenges of international business development enough to enable you to devise an appropriate organisational response, as well as building individual cultural agility?
- Do you have the capability to transfer valuable knowledge between organisational entities in different countries?
If you have or can develop the above capabilities – then regardless of where the next wave comes from you and your organisation will be well-placed to take advantage of it.
Norma Murphy is Programme Director of the new IMI Diploma in International Business Development an accredited programme which develops the capability of managers and business owners to manage across multiple jurisdictions or to grow their businesses in the dynamic global marketplace. Her expertise is in Global Strategic Management and Project Management on Masters level and customised executive education programmes and she has over 14 years industry experience in Multinational IT companies. Her work focusses on combining research-based knowledge into practical organisational strategy.
For more information on the IMI Diploma in International Business Development click here or contact to one of our programme advisors on programmeadvisors@imi.ie or 1800 22 33 88.