Three Things Every Business Should Know About Emerging Markets
We are excited to share the next article in our series, “Three Things,” investigating trends and insights in international trade and commerce with experts from BCIU and our global network. Our second article spotlights doing business in emerging markets. If you want to learn more about BCIU, visit us at our website www.bciu.org and sign up to participate in our programming.
When it comes to expanding operations in an emerging market, most businesses rely on complex business modeling. Simulations spit out what a business needs to succeed and what to expect over the horizon. But often asking obvious questions can lead to deeper thinking and more clarity than you might otherwise expect.
In this post, BCIU Chief Advisor and former Vice President of Africa Operations at Oracle, Desi Lopez Fafié, offers his insights for anyone considering a move into emerging markets. “Organizations expanding in emerging markets should be ready to deal with imperfect or limited intermediaries,” says Lopze Fafie, “which in itself also opens up many opportunities.” With over twenty years of experience establishing and growing business segments around the world, here are Lopez Fafié’s top tips:
Driven By Need Or Want
As you consider expansion into an emerging market, make sure you are there for the right reasons. “Do I have to be there, or do I want to be there?” says Lopez Fafié. If you’re driven by your competitors’ actions, you may not be willing to make all the necessary adaptations to culture, benchmarks, and business models to succeed. But, if you really want to be in a region, you start looking at the opportunity differently. You embrace the long-term and see the changing demands in this new region as opportunities for your business to grow and evolve.
Context Is King
Understanding the social and cultural context in your target region is paramount. “The first thing that I have to explain to strategists is that a place like Africa is not one country but 54 unique countries, just like Europe is not one country,” says Lopez Fafié. The most successful companies embrace the social responsibility trends in their target market, from MasterCard offering financially inclusive products in Kenya to Coca-Cola increasing access to medicines in Liberia and Eswatini. Showing your market that you’re not just interested in commerce, but also the wellbeing of employees, families, and communities will in turn provide you ample opportunity to sustain and grow your business by establishing a win-win environment.
Entering an emerging market will undoubtedly impact your way of doing business. “Ask yourself, do I have to make compromises to my pricing, product lines, or sales channels? If yes, how do they have to be different?” says Lopez Fafié. It’s important to embrace flexibility. It’s likely that operations will not function in emerging markets exactly the way you’re used to, so be cognizant of where you are – and are not – comfortable with change. That’s also where organizations like BCIU can help you understand how to think strategically and drive you to the right resources. “BCIU is great about connecting businesses-to-businesses and businesses-to-governments all around the world to help solve challenges in emerging markets,” says Lopez Fafié.
The future is uncertain for businesses looking to expand into new countries and regions. But emerging markets offer an abundance of opportunities, including young and growing populations, and a diversification of company revenue sources. By asking some simple questions and making sure you do your due diligence in your target market(s), you can seize on these favorable conditions and generate meaningful long-term growth and impact.