GLOBAL MARKETS
T
he rise of emerging $300 laptop and a $30 cell phone. they reflect two characteristics: an
markets is rapidly Bharti Airtel, India’s leading cell openness to and awareness of divers-
changing the struc- phone operator, provides 2-cents-per - ity across cultures and markets com-
ture of the global minute nationwide cell phone ser- bined with a propensity and ability to
economy. Many of vices and yet has some of the highest synthesize across this diversity. Becom-
the emerging markets are no longer profit margins in the world and a mar- ing a prisoner of diversity is just as bad
small. They now constitute eight of ket cap of over $30 billion. as being blind to it.
the world’s 24 largest economies and Q In 2007, China was the third- Jack Welch provides a concrete
Global
are growing at three times the rate of largest producer of motor vehicles in illustration of a business leader with a
their developed counterparts (see the world after Japan and the U.S. (see global mindset. In the mid-1980s, he
chart, p. 34). Consider the following:
Q In recent years, over 50 percent
Less than one-tenth of Fortune 500
Enterprise
of the growth in world GDP has
come from emerging markets. By the
end of 2008, China is expected to companies have even close to a robust
surpass Germany to become the third
largest economy in the world. Chi-
strategy for either China or India, let
alone both.
2020
na’s GDP is expected to become the
world’s largest by around 2030 and
India’s the world’s second largest by
around 2045. chart, p. 35). It is expected to be the went to India to assess market opportu-
Looking to win the Q In 2007, for the first time in histo- world’s largest by 2015. During the nities for GE. He concluded that the
ry, the total deal size of emerging-into- eight years from 1999 to 2007, China market was not yet ready. But he saw
race to access the developed economies was estimated to alone accounted for 42 percent of the something else—a large pool of high-
have exceeded that of developed-into- worldwide growth in the production ly educated people who were not very
world’s most rapidly emerging economies. The hunted are of motor vehicles. According to Gold- expensive. That is when GE started to
fast becoming the hunters, and it is man Sachs, the total number of cars shift software development activities
developing markets? no longer obvious who is the preda- on the roads in China and India could to India. Along with Infosys, Wipro
tor and who is the prey. rise from 30 million today to 750 mil- and Tata Consulting, GE was one of
These five factors will Q In 2000, the list of the world’s lion by 2040. the pioneers in launching the global-
500 largest companies by market cap Given the rapid pace of transforma- ization of India’s IT services industry.
offer the edge you included only three from India and tion, the current decade will almost Welch saw something that was not
none from China. In 2007, the fig- certainly represent a strategic inflec- obvious. He saw the future.
need over the next ure was eight from India and eight tion point in the global economic Compare Jack Welch with Jim
from China. By 2025, there might be landscape. As with all turning points, Holden, in 2000 the president of
decade. BY ANIL K. GUPTA well over 100 companies from not every enterprise will make it from Chrysler. Upon returning from a trip
emerging economies in the list of the here to there. We outline below what to India that year, he was quoted by
AND HAIYAN WANG world’s top 500. the features of a global enterprise must the media as saying: “Call me when
Q For the last several years, the be if it is to emerge as one of the win- you’ve built some roads.” Apparently,
annual output of people getting their ners 10 years from now. what Holden did not see was the like-
masters and PhDs in engineering, lihood (and today the prediction of
technology and computer science in A Global Mindset most auto analysts) that, by 2020,
JASON REED/GETTYIMAGES.COM
China and India each exceeded that The term “mindset” refers to the cog- India will be one of the largest car
in the U.S. nitive lenses through which people markets in the world. By then, how-
Q Emerging economies are also make sense of the world around them. ever, it will be far too late for Chrysler
becoming the font of some radical Companies and business leaders can to make much headway in India.
innovations, such as a $3,000 car, a be said to have a global mindset when The presence or absence of a glob-
CEO Magazine June 2008 33