Introduction
A handful of merits of targeting customers in emerging markets are identifiable since the inception of such a strategy by business enterprises. The form of the target is often based on the approach proposed and justified by Professor C.K Prahalad, who has a heart for admirable business. The recent years have seen a vast number of businesses operating on a global scale target customers in the new markets that are emerging, in their aspiration to gain balance in the organizational operations.
Emerging markets constitute of those countries that are growing at a rapid rate in terms of industrialization, urbanization as well as the experience of great revolutions in the agricultural sector. The proposed bottom of the pyramid is a constitution of activities that are done so that the main target of an organization is at low grounds, where maximization of profits may be easily possible. This often calls for the utilization of low-cost strategies that utilize little capital but with maximized profits at the end of the tunnel (Kurtz and Kim, 2009).
Similarly, the considerations put forward Prahalad approach of business affect the strategies of the business initially in change, a factor that demands change management effectiveness. Most of the affected sectors are those that have succeeded in globalization strategies implementation, which focuses on a large number of customers. The affected sectors are influenced by a diverse number of ways. The international market has also been domineered by international on companies that are willing to sell in the newly emerging markets in their urge to improve their Customer Relationship strategies as well as a competitive advantage. The discussion in this paper investigates into the advantages of selling into emerging markets concerning C.K Prahalad Approach of emerging markets business.
An analysis of emerging markets and bottom of the pyramid
Emerging markets are usually related to the Bottom of Pyramid markets in regards to their operation. They entail the nations that are associated with the business or social activity, normally in the process of rapid development and increased industrialization. There are more than 40 emerging markets in the world today, with China and India being considered the largest economies in the world. The past decades have seen many markets being the target of every international business entities.
The recent changes in the business environment to a volatile state have caused the multinational organizations to rush in the capture for the emerging rapid markets. The reasons rushing to these markets include the desire for enhancing competitive strategies through the development of beautiful outsourcing strategies. Social responsibility has also become a desirable area that needs increment in most multinational companies that are undergoing globalization. The emerging markets are desired as a result of their quick rate of industrialization.
The industrialization creates a rationale for the effectiveness of globalization strategies implementation. Emerging markets are admired mainly due to their cost, proximity, learning, and interest rate considerations. The world today acknowledges China, Russia, India, Brazil, Egypt, Chile, and Indonesia etc as the recent emerging markets that have increased the enthusiasm of investors as well as the developed countries to invest. For instance, the Marco polo company in Brazil has recently steered towards China for outsourcing promotion (Frankel, 2010).
The economic group in any place in the world considered to be extremely poor but the largest in the economic set up represents the Bottom of the pyramid (BOP). The estimated average earning for all people in the world is 2.5 dollars per day for any kind of job done. Current strategies have seen many multinational corporations utilize the base for the bottom of the pyramid for conducting business in the emerging markets. Its historical development is attributed to Roosevelt of the United States. The application of the bottom of the pyramid strategies follows the propositions of C.K Prahalad who identifies poor entities as resilient and extremely productive.
The target of the BOP is mainly on the neglected and ignored ground due to their reluctance in development. Such areas include China, who is of late targeted by many nations so that their infrastructure can be utilized for enhancing productivity. The bottom of the pyramid is always considered to possess the best producers, innovational grounds, receptivity characteristics in addition to opportunities for expansion since market saturation is not identified in such a phenomenon. Bottom of the pyramid targets emerging markets under all costs (Frankel, 2010).
C.K Prahalad Approach of emerging markets business
The approaches developed and proposed by Prahalad in the business realms are sharpening to the government, financiers, as well as business enterprises. The value that Prahalad attaches to the poor in a growing society is rationally high in regards to business operation, economic improvements, social boosting, as well as a ground for excellent emerging markets. The items that are focused on by Prahalad include the consideration of the business and the poor. Is it true that the poor would play a pivotal role in the economic growth?
Also, the conclusion lies in the fact that poverty eradication would be an ample method for fostering international business success. Prahalad puzzle of “the poor and business” puzzle is ideally characterized by elements of corporate social responsibility (CSR) and corporate social investment (CSI) in addition to corporate citizenship, ethics as well as human and labour rights. The approaches of Prahalad in the transformations of the economy are attributed to the excellent implementation of standards responsible for upholding labour, escalating employment as well as ensuring that poor communities are uplifted using CSI programmes implementation (Prahalad, 2010).
The proposition focuses on the rationale created in the international business as a result of the application of corporate strategies in the operations and management of the business. The puzzles considered in this approach are directed towards the implementation of the alternate theory in replacement of the conventional theory.
The convectional theory has it that business remains an instrument of disrespect, oppression, as well as disregard to the role played by the poor in the development of the economy. Prahalad views that conflict appears between development and business since many are the untapped possibilities in the exploitable areas. He also considers environmental scanning as a powerful tool for the MNCs to identify available opportunities in the existing global realms, and the identification of the potential entities that would be a source of corporate success (Prahalad, 2010).
The propositions of Prahalad target the governments in nations, business enterprises around the globe as well as the agencies that fund the businesses. His urge is to these for them to attach some value to the poor in society. The poor are required to be considered as primary producers of the results in every program regardless of the size of their role. They are creative and resilient business entrepreneurs. The creation of value-demand is also a role in the sale-operations that take place in an organization.
His propositions are accompanied by the explanation that multinational corporations can have due to their engagement with the poor’s productivity. The best way to attract the attention of the hidden producers is by steering positively towards the rapidly growing sectors like China and India, which seem to develop at an alarming rate in industrial, urbanization as well as agrarian sectors. The main arguments of Prahalad are because there are fortunes attributed to the entry of a business into BOP strategy and these merits are herein expressed (Prahalad, 2010).
Merits of targeting customers in emerging market
Numerous merits have been identified in regards to the application of emerging markets in china approach. The costs of Chinese products are long-term attraction instruments of multinational companies to China as one of the emerging markets. Cost management has proved aspiration of global superpowers desire to utilize low-cost items as a prerequisite for the production of highly costly goods.
China is one of the offshore plants possessing countries in the world due to its production of low-quality products and at low prices. Similarly, the interest rates in China are favourable and low to the extent of affordability by all as compared to others in existing markets. Moreover, the solid infrastructure is also an attraction factor of Multinationals to China. Management is a success in the companies due to the ability to maintain low production costs, the management of procurement offices in the entire global networks etc.
Indeed, MNCs’ success years have seen them apply quality-outsourcing strategies, acting as a rationale for the attainment of competitive advantage in the global context. Thus, they have easy access to knowledge and suitable skills for production through global interactions. Their end products have gained market proximity due to the utilization of Chinese low-cost materials in the manufacture of high-quality products that are sold to global areas. The production and distribution environment has also become favourable in regards to production for global purposes (Mishkin, 2000).
Increment in market size is also a rationale for the increment of market size for international business. The targeting of customers in the emerging markets means targeting people who are highly enthusiastic, outgoing, and receptive in terms of new strategies implementation coupled with a development mind. This makes the Bops’ to generate a large market size.
The costs of production in the BOP’s re normally fair, because speed is a vital requirement in the development that takes place within the organization in those countries that are highly industrializing. Normally this favourable character attracts the developed countries to initiate projects in the developing countries. Furthermore, the countries like China have laws of the country regulated to fir development requirements, which means that the countries that will target China as an emerging market have the advantage of compliance with limited requirements. This is facilitated by the kind of development acquirement heart created by the growing emerging nation (Chandra, 2004).
The utilization of poor people within nations to generate wealth for business has a rationale for the improvement of resource-based view within the international businesses. This is a result of their desire to exploit their desired utilities in the emerging markets and use them for expansion. The alternate theory developed by Prahalad requires one to go an extra mile in the production and promotion strategies to create room for the invaluable transition.
Thus, the resource-based view gains push in the utilization of new entities to foster development. It is also ample in that the utilization of BOP’s enables the enhancement of corporate social responsibility. The desire of every organization in recent years is directed towards participating in the processes that help uplift society. Therefore, this will impact on the society positively, since even the poor feel that they possess qualities and gifts of appreciation, which makes them, develop more enthusiasm and morale in regards to boosting their production rates (Day and Schoemaker, 2004).
The enhancement of corporate governance is also promoted with the application of steers towards the emerging markets. Corporate governance has a rationale for the increment of the size of the market. The creation of room for new strategies is also enhanced by the attainment of this feature because international businesses that target the emerging markets have to be flexible in terms of change acceptance. This is always by adjustments that are required to manage change effectively since it is not always easy to acquire new strategies easily.
Mitigation of risks strategies that may be accessed in the emerging markets needs to be defined to foster the preparedness of the international market targeting China as speed up strategy to their increment. Above all, BOPs’s are ample areas in which active participation of international business would lead to the development of outsourcing strategies, which lead to the enhancement of competitive advantage. The entities have to be ready to develop Customer relationship management strategies that are quite outgoing in terms of development.
The adoption of integrated marketing communication strategies is also possible as these international businesses associated with the rapidly changing technological features in the emerging markets. China has a very highly developed infrastructure that leads to objective achievements for businesses operating in the country. This helps in quick and drastic business trends, though the considerations of this approach have long resulted in pronounced effects (Bléjer and International Monetary Fund, 2009).
The effects of the considerations raised by this approach on strategies of companies selling into emerging countries
The considerations raised by the approach generated by Prahalad results in pronounced effects on companies that have recently targeted emerging markets. This occurs in terms of development and company maintenance strategies, the sectors that are influenced as well as the tremendous ways in which they are affected. The targeting of emerging markets caused a paradigm shift within a company, owing to the need for fitting into the shoes of the desired emerging market in China. This is because of the need for change that is desirable so that international business growth may be boosted. Resource-based strategies have to be acquired to pave way for change. However, this may not be easy due to the existence of particular barriers that hander required transitions. It also calls for change in all aspects of the companies selling within a large scope (Sprague, 2010).
Change management also becomes a key requirement, which posses many challenges, since for organization that do not ample employee management strategies have a hard time penetrating the global markets. The sectors that are affected include the experience economy sectors, which include the arts, tourism as well as events companies. The Multinational corporations seeking for market expansion are the key players in this strategy of targeting emerging markets.
The governments, financial supports, as well as business enterprises in the global context, are adversely affected. Thus, the targeting of emerging markets leads to the requirement of commitment, team building, and competitive outsourcing strategies that are aimed towards the achievement of BOP’s steering goals. Sustainability is also a key requirement, thus companies selling in the emerging markets need to improve their operations, performance etc to reap the benefits of participation in emerging markets (Mohr, Sengupta and Stanley, 2009).
Conclusion
A handful of merits of targeting customers in emerging markets are identifiable since the inception of such a strategy by business enterprises. The emerging markets have today become a point of a target for all multinational corporations due to anticipated low production costs, ample host country laws that are geared towards development plus the merits of developed infrastructure in China. The emerging markets and BOP’s participation in multinational corporations are made possible by the application of new strategies that will enhance the outsourcing business. This leads to the achievement of goals by companies that sell in the merging markets.
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