The aim of this paper is to assess how throughout the next decade global opportunities will shift in favour of firms from emerging markets. On the other hand, this puts increased challenges on firms from developed economies to keep internationally competitive.
The paper will begin by discussing Emerging Market Firm?s (EMF?s) opportunities followed by their challenges. The main points in terms of opportunities will be, high population translating into an increased target market, abundant resources both human and natural, as well as approach to business. The challenges that will be looked into include, the latecomer disadvantage, management of unfavourable economic conditions as well as inexperience relating to family owned enterprises. The paper will then look at Developed Market Firms (DMFs) and their opportunities and challenges. The opportunities they face include their established foundation, economies of scale and scope. The threats comprise of an aging and retiring workforce, lack of knowledge in emerging markets and assessing whether their products are suitable for other markets. The paper will then finish with a comparison of the two types of markets with the conclusion finding that in the decade ahead emerging firms will have greater opportunities as opposed to developed nations.
Emerging markets are market economies that are large in terms of their population size, are rapidly growing, and have a low per capita income (Grewal et al., 2015).
With population being so high compared to developed markets it is only reasonable to believe that EMFs will continue to thrive in the decade ahead. The population difference means that firms will have a significant middle class with disposable income that they can target domestically. During the next two decades, emerging markets will be responsible for a high share of the world?s growth according to Cavusgil, Ghauri and Agarwal (2002), due to a reduction in economic regulations by the government intended at improving economic growth and the development of trade activities (Latukha, 2016). An example of this if the easing up of foreign investment restrictions and reduced income tax rates in India (Latukha, 2016).
Emerging economies also experience opportunities in manufacturing and production based industries. This is because emerging markets have abundant, low-cost labor, as well as the increasing percentage of their population that is still able to work over the next 10 years. This is evident when looking at Apple who make most of the iPhone outside of America (Foroohar, 2012). It is also important to note that since the 1980?s the global work force has rapidly increased, by some 1.2 billion people, mostly coming from areas of emerging markets (Dobbs, Koller and Ramaswamy, 2015). In addition, many emerging markets are the center of abundant amounts of natural resources. These firms have opportunities such as natural gas, oil, agriculture and mineral extraction in countries like Brazil and...