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Emerging Markets & Global Brands

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Prof. J.Grant - V SGBED International Research Symposium

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Emerging Markets & Global Brands

  1. 1. Click to edit Master title style 2015 International Brand Conference Emerging Markets & Global Brands John Grant Senior Lecturer MIT Sloan School of Management December 10, 2015
  2. 2. Click to edit Master title style Forces Impacting China’s Economy © 2015 MIT Sloan School of Management 2 Slowing export, domestic economy and fixed investment growth rates Wage increases • Loss of factor cost advantage • Movement of some facilities & production offshore Producer price declines Push to increase domestic consumption Renminbi inclusion as reserve currency
  3. 3. Click to edit Master title styleChina’s Growing Wages Increase Middle Class but Hurt Factor Cost Advantage Average Wage of Urban Units ¥60,000 ¥50,000 ¥40,000 ¥30,000 ¥20,000 ¥10,000 ¥0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 © 2015 MIT Sloan School of Management Source: China National Bureau of Statistics 3
  4. 4. Click to edit Master title style1970s/80s Japan’s Economy & Exports Expanded Despite Exchange Rate Inflation 0.0 50.0 300.0 5,000,000 250.0 4,000,000 200.0 3,000,000 150.0 2,000,000 100.0 350.0 1966 1968 1970 1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 ¥/$ 400.0 -‐ 1,000,000 6,000,000 $, M 7,000,000 Japan Economic Performance Exports GDP Yen/$ © 2015 MIT Sloan School of Management Source: World Bank 4
  5. 5. Click to edit Master title styleFactors Supporting Japan’s Building global brands © 2015 MIT Sloan School of Management 5 Performance in 1970s/80s Enlightened government policies Rapid productivity improvement • “Japanese Management” • Automation Growth of high-technology industries Shift from exports to domestic consumption Engagement in multinational enterprise
  6. 6. Click to edit Master title style Action Learning at MIT Sloan  Founding principle of MIT – “Mens et Manus”  Core element of MIT Sloan curriculum  Integrates course frameworks with practical experience © 2015 MIT Sloan School of Management 6
  7. 7. Click to edit Master title styleMIT Sloan Programs That Cover Brand © 2015 MIT Sloan School of Management 7 Issues in Developed & Emerging Markets Global Organizations Lab Enterprise Management Lab Global Entrepreneurship in Emerging Economies Lab China Lab India Lab
  8. 8. Click to edit Master title style200 Annual Projects: 50% Emerging Markets (20+ Countries); 15% in China Developed Markets Emerging Markets © 2015 MIT Sloan School of Management 8
  9. 9. Click to edit Master title style Top 50 Most Valuable Global Brands © 2015 MIT Sloan School of Management 9Source: Brandfinance, 2015
  10. 10. Click to edit Master title style Brand Value Matters Top 10 vs 41-50 Operating Margins: +8.1 percentage points Return on Equity: +10.9 percentage points Brand Value: +4.0 times Source: Brandfinance, 2015; Google Finance© 2015 MIT Sloan School of Management 10
  11. 11. Click to edit Master title styleObservations of Global Brand © 2015 MIT Sloan School of Management 11 Managers in Emerging Markets  Intense interest in emerging markets (key to future growth and volume)  Early focus on global consumer profiles in urban areas  Brand & talent acquisitions to localize  Movement towards middle class preferences (value vs hedonistic) of 2nd & 3rd tier localities  “Resource-Based View” on value of the brand • Focus on human resources, brand management, performance management – Data mining of social networks
  12. 12. Click to edit Master title styleObservations of Local Enterprise in © 2015 MIT Sloan School of Management 12 Emerging Markets  Interest in business model transfer, not brands  Successful companies pivot towards brand value, often for defensive reasons • Loss of marketing talent to MNCs • Localization by foreign competition  Leverage Country of Origin brand affinity in foreign markets  Increasing focus on human capital development  New analytics efforts, particularly on Millennials  Weakness in organization, processes and governance to compete in global markets
  13. 13. Click to edit Master title style Some China Takeaways © 2015 MIT Sloan School of Management 13  Offensive and defensive need to pursue brands • Higher value added, profits • Build customer loyalty  China as a Brand • Value realization if brand name association with quality can be matched with reality (e.g. Haier)  Invest in human capital to build brand value  Go global to learn how to compete  International brands require global organization • Need to adapt management practices, policies and governance

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