One of the best ways to learn a concept is to teach a concept, and i.docx

One of the best ways to learn a concept is to teach a concept,
and in this assignment it will be necessary for the learner to
understand and explain the concepts from
Modules 1
and
2
in a 7–10-slide PowerPoint presentation. The Internet will be a
great resource for completing this assignment because the
learner can use keyword phrases to pull the specifics needed to
cover the topics and complete the assignment.
You have been asked to create a PowerPoint presentation to
train a group of new employees for Future Trends Financial
Firm on key concepts of emerging markets. Include the
following in your presentation:
Identify and explain key concepts of emerging technologies,
highlighting their use and availability for emerging and
developed markets.
Define and describe common industry concepts including:
institutional voids, business groups, technological capabilities,
changing income distribution, and bottom of the pyramid.
Please be sure that the correlation between concepts and various
markets is appropriate.
Develop a 7–10-slide presentation in PowerPoint format,
utilizing at least two scholarly sources. Apply APA standards to
the citation of sources.
Make sure you write in a clear, concise, and organized manner;
demonstrate ethical scholarship in accurate representation and
attribution of sources; display accurate spelling, grammar, and
punctuation.
Information from Module 1:
In
Module 1

, you will begin your journey into understanding the concept of
EMs. This module’s discussion question and assignment are
both designed to help in building the foundation knowledge of
understanding EMs.
What is an EM? According to Investopedia (n.d.), an EM is, “A
nation's economy that is progressing toward becoming
advanced, as shown by some liquidity in local debt and equity
markets and the existence of some form of market exchange and
regulatory body” (para. 1).
EMs surfaced in the 1970s as
less developed economies
. Countries that are considered EMs possess certain
distinguishing traits. Some of the common traits are:
Demanding culture
High rates of immigration
Fragmented market
Growing youthful population
Investors are shifting their investments to EMs because of their
potential long-term growth rate (Johnston, 2011). One of the
main reasons EMs are rapidly growing is due to the countries'
visible economic advancements. According to EPFR Global, a
fund tracking company, investors invested more than $50 billion
into EMs in 2012 (Bloomberg Businessweek, 2013).
Investopedia. (n.d.).
Emerging market economy
. Retrieved from
http://www.investopedia.com/terms/e/emergingmarketeconomy.
asp
Johnston, M. (2011, November 23).
5 factors to consider in choosing an emerging markets ETF
. Retrieved from
http://seekingalpha.com/article/309867-5-factors-to-consider-in-
choosing-an-emerging-markets-etf
Bloomberg Businessweek. (2013, January 31).
The top 20 emerging markets
. Retrieved from

http://images.businessweek.com/slideshows/2013-01-31/the-top-
20-emerging-markets
The terminology “emerging market” originated with Antoine
van Agtmael, a World Bank economist, in the late 1980s to
identify those areas with surging economies and swift
industrialization (Cavusgil, Ghauri, & Akcal, 2012).
EMs can be best defined as countries that are not yet fully
developed markets but do have some trademarks and
characteristics of a developed market. The significant changes
in the political, economic, social, and cultural environment are
greatly contributing to the growth of EMs. These dynamic
changes lead to risk and volatility. Technology and education
have become big driving forces behind EMs. With high demand
for skilled labor in these regions, the area’s education and
technology are developing rapidly to meet the demands and
competition in the global economy.
The term BRIC is often associated with EMs. BRIC stands for
Brazil, Russia, India, and China. These economies are the
fastest growing and may potentially overtake the world's largest
economies (Cavusgil et al., 2012).
In terms of Gross Domestic Product (GDP), the BRIC countries
accounted for more than 50% of global growth between 2003
and 2007, which shows a significant increase from 2003–2007
where the same figure was approximately 27% (Cavusgil et al.,
2012).
The FTSE index analyzes stock market indices based on their
level of development and lists the following emerging nations:
Brazil, the Czech Republic, Hungary, Mexico, Malaysia,
Poland, South Africa, Turkey, and Taiwan. Countries on the
subsequent list are Chile, China, Columbia, Egypt, India,
Indonesia, Morocco, Pakistan, Peru, Philippines, Russia,
Thailand, and the UAE (FTSE, 2012).
These countries are in a transition phase from developing to
developed markets due to rapid growth and industrialization. It

is anticipated that by 2020, the five biggest EMs' share of world
output will double to 16.1 percent from 7.8 percent in 1992
(Kaplan, 2013).
To summarize, EMs have:
Economic reform in place aimed at alleviating problems such as
poverty, poor infrastructure, and overpopulation
A steady growth in gross national product (GNP) per capita
Increased integration in the global economy
Cavusgil, S. T., Ghauri, P. N., & Akcal, A. A. (2012).
Doing business in emerging markets
(2nd ed.). United Kingdom: Sage Publications.
Kaplan, M. D. (2013). International marketing: Emerging
markets [PowerPoint Presentation].
Izmir University of Economics, Turkey
. Retrieved from
http://homes.ieu.edu.tr/mdemirbag/523/emergingmarkets.pptx
There are a few variables that have influenced EMs. They are:
Significant market potential. A few expectations include the
most extreme rates of populace development and infrastructure
expansion. The potential for business is immense as an excess
of 80% of the global populace dwells in developing markets and
cannot be disregarded.
Ongoing financing in infrastructure expansion incorporating
divisions in transportation, energy, and communication results
in reducing the expenses of trade in developing markets.
Professional counseling and publicizing associations have made
predicting for EMs less difficult to maneuver through business
and societal structures within the markets.
The advancement of technology has made them competitive on a
worldwide scale. Advanced management tools have made it less
demanding for managers to prepare themselves to outline
product generation in a more straightforward way.
Governments are providing full support to foreign financing
making the financing process less burdensome. Despite the
intercultural contrasts in a few nations, more supervisors have

understood the quality of making worldwide "win–win"
connections and affiliations together. Numerous western
administrators have begun studying remote dialects and have a
superior understanding of other societies. Likewise, numerous
local administrators have been taught in the west and have
attained a great deal of know-how in regards to managing
western firms and societies.
The information revolution has made more data accessible in
developing economies, and business methodology planning has
become more simplistic in nature.
Doing business in EMs exposes multinationals to legal and
political systems in those markets. Firms need to adhere to laws
and regulations in a given market. While analyzing markets,
regulations that may lead to increased risks, as well as the
strength of the enforcement mechanisms protecting the interests
of the companies, must be considered.
There are two types of political systems:
Socialism:
It is a political and economic theory of social organization that
advocates that the means of production, distribution, and
exchange should be owned or regulated by the community as a
whole.
Democracy:
It is a system of government by the whole population or all the
eligible members of a state, typically through elected
representatives.
These political systems can have a huge impact on the
methodology of business, exchange practices, population,
culture, and communication.
The effect of the different types of political systems on the
economy leads to one of the following:
Command Economy:
An economy in which production, investment, prices, and
incomes are determined centrally by a government.
Market Economy:
An economy in which decisions regarding investment,

production, and distribution are based on supply and demand,
and prices of goods and services are determined in a free price
system.
Command economies would correlate more with the socialistic
forms of society and market economies would be more
conducive with the democratic structure of government.
So depending on the political systems, foreign uncontrollables
take place in the host country. Their investment acceptance
decisions are based on their own legal systems, government
policies, or cultural beliefs.
A country’s international trade policy provides a framework for
export, import, and foreign investments. An international trade
policy has the following aspects:
Export-Import Assistance:
When you wantto increase wealth and growth within a nation, it
is necessary to expand your relationships with other
industrialized nations. As you build these relationships, you
open the door for trade and exchange of goods and services. By
allowing this exchange, you create a catalyst to encourage
newcomers and establish transparency in the marketplace. The
assistance can come in the form of laws and policies or actual
monetary exchange to facilitate the needed connections for
growth. For example, the German economy ministry brought the
leaders of 125 Chinese medium-sized companies to Bonn to
meet with German counterparts.
Financial Assistance:
This provides cost sharing for growth projects that are
expensive and demanding on the domestic firm. Branching out
to other nations to share in this venture can contain costs for the
domestic firm and build economic relations with other nations.
A few examples are:
Peoples Insurance Co of China is the country’s agency
responsible for the export credit insurance sector.
PICCs 40 subsidies offer nationwide export credit insurance and
guarantees, export documentation insurance, and foreign

investment insurance.
German Hermes bank provides long-term low interest rate loans
to companies bidding for projects in industrially developing
counties.
US Exim bank provides financial support to US exporters.
Tax Refunds:
Governments may support exports by refunding taxes to
exporters. Policy is often found in countries that rely heavily on
exports. China initially executed a fare duty discount framework
in April 1985 as an approach to upgrade the nation's
aggressiveness in outside businesses by removing twofold tariff
on exported products (China Briefing, 2014).
Tariff Preferences:
Sometimes governments support the import of particular goods
or services. EU, Japan, and the U.S. have import support
programs that offer tariff preferences for selected products from
industrially less developed countries in order to stimulate
economies. However, in the agricultural sector, this preferential
treatment for the poorest countries has stirred up fierce
resistance from other countries such as Argentina, Egypt,
Brazil, and India, who have filed a complaint of unequal
treatment at the WTO. Normally, when products that are viewed
as fully competitive are granted preferential treatment, they no
longer qualify for import support.
Trade Barriers:
They either protect the domestic industries by raising prices to
noncompetitive levels or compensate for subsidies by
governments to their exporters.
In 2003, India had an average tariff on industrial goods of 58.7
per cent compared to Brazil with 30 per cent and 4.1 per cent in
the EU.
From time to time, both the EU and the U.S. use tariffs on
specific products to protect their industries. For instance, the
U.S. imposed special tariffs on steel imports because a lack of
investments had resulted in the domestic steel industry being far
from globally competitive.

Nontariff Barriers:
Government laws, regulations, policies, or practices protect
domestic producers from foreign competition. As trade
liberalization has progressed through WTO and international
economic co-operation agreements, governments are using
nontariff barriers to protect some of their industries. For
instance, the agreement obliges governments to distribute
sufficient data for prospective traders to know how and why
licenses are conceded. It additionally depicts how nations
should advise the WTO when they present new import
permitting methodology or change existing systems. The
agreement offers direction on how governments ought to
evaluate requisitions for licenses (World Trade Organization,
2014).
China Briefing. (2014, May 21).
China enhances export tax rebates to boost foreign trade.
Retrieved from
http://www.china-briefing.com/news/2014/05/21/china-
enhances-export-tax-rebates-to-boost-foreign-trade.html
World Trade Organization. (2014).
Understanding the WTO: The agreement—Non-tariff barriers:
red tape, etc.
Retrieved from:
http://www.wto.org/english/thewto_e/whatis_e/tif_e/agrm9_e.ht
m
The types of nontariff barriers are as follows:
Arbitrary Product Classifications:
In India, investors are supposed to pay 20 percent import on
equipment. However, due to imprecise regulations, in reality,
what is classified as equipment differs among nations.
Import Quotas:
Quantitative restrictions on imports that may be expressed as
individual units imported or as total value of imports expressed
on an annual basis. As a result, international marketers try to

schedule their deals in the beginning of the year before the
quota is met. Therefore, promotion, financing, and inventory
have to be managed accordingly. Also, the exporter’s
government may retaliate until the host government removes
barriers.
Import License Requirements:
A government can oblige firms to apply for an import license.
Such licenses can be delayed due to bureaucracy and it may take
years to obtain the right to import. Here are a few examples:
Dornier, a German manufacturer of weaving machines, had to
prove that no producer in India could make the same kind of
machine in order to receive an import license. In order to satisfy
this restriction, the company would have had to reveal its know-
how in a country in which Intellectual Property (IP) was not
protected; therefore, Dornier decided to enter into a joint
venture with an Indian producer.
In service industries, government permission may be needed to
operate in a market. There may even be a license fee within the
country. For example, in China, Shanghai imposed huge license
fees on Citroen cars from the Hubei province to protect the
locally made Volkswagen, which monopolized the taxi fleet.
Further, the Shanghai government owns a stake in the
Volkswagen venture.
Discriminatory Government Procurement Contracts:
There isdiscrimination against foreign suppliers in bidding for
government contracts because of the desire to spend public
funds in the domestic economy. For example, Buy America
rules oblige the US defense department to purchase many kinds
of equipment at home. Alternatively, government may impose
bidding deadlines that are too short to be met by suppliers from
another country.
Port of Entry Requirements:
Sometimes imports are allowed through a specific harbor,
airport, or customs office. The official purpose is to finance the
development of transportation infrastructure and to streamline
bureaucratic infrastructure for customs purposes. For example,

in Belize, you must notify the port authorities ahead of time
about the time of arrival and departure, crew list, and
application for clearance (Belize Port Authority, 2008).
Local Content Requirements:
Local content is a way to get other businesses in on the new
venture. New market entrants are required to partner with other
local businesses to boost domestic sales and economic growth.
For instance, before joining the WTO, the Thai government
required local content of more than 50 per cent for pickup
trucks and passenger cars.
Investment Policy:
Hotels, telecom networks, and retail outlets must be located
where the customers want to use them. Suppliers of such
services are more concerned about investment policies, than
trade policies, of governments in host country markets. These
policies range between no private investment and only private
investment. How the emerging firms are funded can dictate how
they operate. Foreign governments can also impose restraints to
protect their investment and economy.
Foreign Direct Investment (FDI):
When the company invests in a subsidiary or joint venture, one
way to attract FDI would be to lower taxes. In Slovakia, there is
a 19 per cent flat income and corporation tax. These types of
incentives protect and enhance the local economy. FDIs do help
in creation of new jobs, but if the host country suppliers are not
included in the transactions, then the profits go strictly to
foreign investors.
Also, there can be problems when exiting a venture. If you shut
down there must be proper protocols to follow in such
instances. For example, in France, Renault announced the
shutdown of its plant in Belgium without negotiating a social
plan and the announcement provoked negative reactions and a
ruling by the European court declaring the Renault decision to
be illegal.
Effective deterrents to foreign investments are the nonexistence
of clear regulations, too complicated or unstable regulations,

and very slow handling of bureaucratic work.
Subsidies:
Subsidies are the payments made by local authorities and
regional institutions in an attempt to improve either the
competitive position of the firm or the attractiveness of the
location to the investor. When governments subsidize local
companies, it is mainly to keep them in existence.
The EU forbids any subsidies that lead to a distortion of
competition in an industry; nevertheless, member countries such
as Italy, Greece, and Spain have managed to keep their national
airlines alive through subsidies.
Economically developing countries do not possess enough free
capital for direct payments. They subsidize investments by
offering tax breaks over substantial amounts of time or the
provision of energy and water at a subsidized rate.
Belize Port Authority. (2008).
Entry Requirements
. Retrieved from
http://www.portauthority.bz/index.php?section=10
Cultural diversity created by fundamental differences in cultural
values can be an issue if not researched. Hofstede’s cultural
dimension theory or indexes can be used to measure the effects
of a society’s culture on the values of its members and how
these values relate to behavior.
Hofstede’s Indexes:
It shows how cultural values influence various types of
business and market behavior. The dimensions of national
cultures are as follows:
Individualism/Collective Index (IDV)
Power Distance Index (PDI)
Uncertainty Avoidance Index (UAI)
Masculinity/Femininity Index (MAS)
In EMs, foreign entrants need to understand the culture in order
to be able to compete with the local firms, appeal to consumer
tastes, and conduct business with local companies successfully.

Cultural differences are especially highlighted in the context of
EMs due to dissimilar traits of these markets when compared to
developed markets.
Many EMs are associated with collectivist cultures that
highlight a dependence on the social system and emphasize a
person’s role within the group. In parallel with the prioritization
of collectivist values, the EMs’ social and business environment
is affected by relationships. Hence, in such cultures, building
long-term relationships based on trust and loyalty is very
important.
In cultures where friendship or relations are essential, focusing
on building relations and establishing trust arises as a major
aspect of doing business. Focus on collectivist values can be
observed in many EMs in different ways. For instance, in
Confucian societies, individualism is not a desired trait and
relationships are very important. The emphasis on relations
leads to the dominance of family businesses as well as the
dominance of networks in the business landscape of Confucian
societies. Such networks are referred to as Guanxi in Chinese
society, Ningen Kankei in Japan, and Kwankye in Korea.
Similarly, in Latin American countries, “compadre” refers to
friendship, which arises as a cultural prerequisite for developing
effective business relations (Cavusgil et al., 2008).
In terms of Hall’s definitions of high-low context cultures, most
EMs are associated with high context cultures. As such, time is
nonlinear and activities are not scheduled or organized
according to specific schedules. In addition, the distances
among people are narrower, implying less formality, closer
relations, and an emphasis on relationships in doing business.
Cavusgil, T., Knight, G., & Riesenberger, J. R. (2008).
International business: Strategy, management and the new
realities.
Upper Saddle River, NJ: Pearson Prentice Hall

Information from Module 2:
EMs are used today in hedge funds for investing, and have
proven to be highly profitable. Therefore, this module will aid
the learner in understanding the opportunities, trends, and
challenges a country experiences, as it becomes an EM. How
will these opportunities, trends, and challenges be felt
domestically and globally? The lessons will be applied through
discussion and the creation of a PowerPoint presentation
illustrating the learner’s understanding of the concepts for this
module.
EMs are not a passing fad, but instead they are a force to be
watched, monitored, and studied. If you conduct an Internet
search, you will find a plethora of information on the impact
EMs are having on almost every industry including mobile,
pharmaceutical, and education.
Trends affecting EMs are increasing global power, innovations
in technology and green initiatives, demographic changes, and
improving governmental relationships with businesses. EMs are
providing new opportunities in mobile advertising and
pharmaceuticals.
PR Newswire (2013) confirms this point stating, “Opportunities
for environmental market participants in the region will stem
from the need to renew water resources, handle wastewater
discharge and the mounting volume of various types of waste,
dispose old electronic devices, and manage the deterioration of
air quality" (para. 4). Investors and economists are keeping a

close watch on EMs for they are a formidable force in today’s
ever-shrinking global environment.
Review the following articles in the
Webliography
for more information:
“Why Mobile Advertising is Future Emerging Market
Opportunity”
“Winning in Pharmaceutical Emerging Markets with Analytics”
PR Newswire. (2013, October 1).
Mega trends create enormous opportunities in the environmental
sector in Asia-Pacific, finds Frost & Sullivan
[News release]. Retrieved from
http://www.prnewswire.com/news-releases/mega-trends-create-
enormous-opportunities-in-the-environmental-sector-in-asia-
pacific-finds-frost--sullivan-225918351.html
The economy of a country is a major part of the macro-
environment of the company. An economy displays the skills
and flexibility of the population and the available infrastructure
and level of technology.
The economic environment includes factors and trends related
to income levels and production of goods and services. All of
these factors play into the distribution of wealth and growth
within a society or nation. For example:
Economic trends in one part of the world can affect others.
Economic risks are interdependent with political risks.
Differences and fluctuations in international currencies may
affect the value of assets and liabilities. This affects prices and
thus the ability to compete.
Differences in inflation rates may affect internationally
diversified firms’ ability to compete.
Enforcing intellectual property rights on CDs, software, etc.
In analyzing the economic environment of a firm, the marketer
first has to determine the factors that are relevant to the product
market(s) the company is serving. For example, a producer of

fine food products may define the economic system as
population size and age structure, disposable household income,
level of urbanization, climate, transportation, and
communication.
Then, the current state of international, regional, and local
factors of influence can be assessed. Management must also try
to anticipate the potential states of the relevant factors on the
planning horizon. For example, ten years’ stagnation and
reduced tariffs helped increase Japanese purchases of imported
food in the 1990s. Recession also fostered innovations in the
traditional distribution system. Discount retailing and
convenience stores have grown. Such developments helped non-
Japanese food marketers enter the market and will not be
reversed. International agreements make sure that the tariffs
stay low in the future.
An evaluation of the economic environments in the target
markets should consider their current states and their potential
developments to allow the marketer to decide to manage the
environments. For example, in 1996, inflation was 35%
accompanied by falling GDP, but companies such as Wrigley’s
(gum) invested in St Petersburg because it expected a positive
economic development.
In other cases, companies may not consider a potential country
market or may decide to withdraw. At about the same time in
Bulgaria, foreign investment began to dry up when privatization
was at a standstill. Investors such as Texaco retreated because
they were faced with bureaucratic and financial hurdles as well
as mafia-like structures in the highest levels of government.
The future treatment of countries is a consequence of analysis
done on the country's markets.
Consider this, “Countries that have the most economic freedom
also tend to have higher rates of long-term economic growth and
are more prosperous than those that have less economic
freedom” (Reed, 1999, para. 1). Unequivocally, the numbers
show that “countries with the lowest levels of economic

freedom also have the lowest standards of living” (Reed, 1999,
para. 1).
From a population point of view, the bases of economic wealth
include:
Size and Growth:
Sheer population growth without purchasing power is not
economically meaningful. For instance, Africa’s population
growth rates are high but per capita economic growth is low or
negative. Within a society often the economically poorest
classes exhibit the highest population growth—people tend to
have more children in order to help elders, or for religious
beliefs.
Countries with younger populations (such as Brazil where a
quarter of the population are purported to be under 15) are faced
with the need of creating one million new jobs to absorb the
increase in population that needs to work.
Due to the fast population growth in low-economic-level
societies, markets are growing in terms of consumers but they
are increasingly unable to afford marketers’ products.
Immigration also leads to growth inpopulation. For example,
almost 41 million immigrants resided in the United States in
2012—a recorded numeric high for a nation that has been a
significant ending point for global travelers (Nwosu, Batalova,
& Auclair, 2014).
For marketers, this means the creation of new markets or growth
of traditionally less important niches. However, this also means
that immigrants compete for jobs and resources.
Age distribution or Age composition:
Young or new markets emerge with products for young families
and children. As people become older, other markets, such as
retirement villages, become popular in the U.S., Australia, and
Spain. Retirement funds and retirement insurance are now
booming as a result. Products need to be designed to make them
easier to obtain.
For example, China has a one child policy. Chinese consumers
spend 30 per cent of their income on one child. Maturing of the

population may lead to new market opportunities but also
presents issues for these countries.
In Japan, economists are worried that there will be insufficient
workers to support the retired generation (Condon, n.d.). In
Europe, the population is getting older (Economic and Financial
Affairs, 2012). In France, three people held a job for every
retired person in 1970 (Simons, 1992). As a result, the existing
social security system will be unaffordable in the future. The
marketer in the future will be faced with a population of older
people with less money and a younger generation preoccupied
with financially ensuring retirement.
Urbanization:
Population in cities represents concentrations of potential
customers. Rapid urbanization can also lead to unemployment.
Today, very big urban agglomeration is characterized by a
duality; ghettos of poor and often unemployed people with
largely low levels of education and a center with skyscrapers,
bank offices, and luxury boutiques. Urban and rural dwellers
often have different consumption patterns. In the U.S., Sears
built a business catering to the rural population through
catalogue sales, but as an increasing proportion of the
population moved to the cities, Sears found it necessary to
follow customers and change its product offering thereby
placing more emphasis on stores in shopping centers.
Capabilities:
The intellectual capability of a country's population has a
significant influence on its wealth. Such capabilities are to
some extent based on the available knowledge and the nature of
a country’s educational system—this is of interest to
international marketers. For example, education affects literacy
rates, generally accepted rate of change, levels of available
technology, and the number of highly educated people in the
workforce. The level of education in the populace is an
indicator of economic growth and communication. The level of
education among the population will affect EM firms’ ability to
communicate, build relationships, and maintain them.

Condon, B. (n.d.). As births fall, economies may falter.
The Japan Times Ltd
. Retrieved from
http://www.japantimes.co.jp/news/2014/05/08/world/social-
issues-world/births-fall-economies-may-falter/#.U3YGydKSwy5
Economic and Financial Affairs. (2012).
Ageing report: Europe needs to prepare for growing older
. Retrieved from
http://ec.europa.eu/economy_finance/articles/structural_reforms
/2012-05-15_ageing_report_en.htm
Nwosu, C., Batalova, J., & Auclair, G. (2014, April 28).
Frequently Requested Statistics on Immigrants and Immigration
in the United States.
Migration Policy Institute.
Retrieved from
http://www.migrationpolicy.org/article/frequently-requested-
statistics-immigrants-and-immigration-united-states
Reed, L. W. (1999, November 1). States, Economic Freedom,
and Wealth Creation.
Foundation for Economic Education.
Retrieved from
http://www.fee.org/the_freeman/detail/states-economic-
freedom-and-wealth-creation
Simons, M. (1992, August 28). Orange journal; As French get
older, social security gets wobbly [Archives].
The New York Times.
Retrieved from
http://www.nytimes.com/1992/08/28/world/orange-journal-as-
french-get-older-social-security-gets-wobbly.html
EMs are associated with higher inefficiencies in capital,
product, and labor markets when compared to developed
markets which result in institutional voids (Lee, Peng, and Lee,
2008, p. 63). These voids increase costs for foreign firms due to
reduced efficiency and higher risks in terms of enforcing

contracts, protecting assets as well as higher costs in the
absence of intermediaries.
Below are a few examples of institutional voids:
Capital Markets:
Limited presence, resource, or coverage of financial
intermediaries.
Labor Markets:
Difficulties in selecting and finding personnel in the absence of
specialized service firms, such as human resources and talent
management; issues associated with limited supply of trained
personnel.
Product Markets:
Poor enforcement of laws; non-transparency in judicial
systems; lack of institutions providing information, such as
market research firms; difficulties in accessing partners in the
presence of information constraints, for example, issues with
finding qualified distributors and contractors.
Firms need to consider the status of institutions, that is,
differentiate between effective and ineffective institutions in a
given EM. They need to determine how the specific voids in a
given market can affect their business.
Business Groups
Business groups are legitimately self-reliant firms associated by
formal and casual ties that regularly work in different
commercial enterprises. These groups could be investigated as
associations assembled because of expenses emerging from
flaws in product, capital, and labor markets. Group members
can connect with the technology, human capital, and budgetary
capital of the group and use the network's system. The group
name likewise empowers the companies inside the group to pull
in talent, increase capital effectively in the domestic market,
and develop client trust rapidly. Still, as institutional
inefficiencies diminish, the positive impacts of the business
group, originating from the reaction to institutional
inefficiencies, will reduce. Business groups are often:
Very large

Diversified
Significant resources
Established systems for EMs (HR, distribution, production, etc.)
They are often associated with unrelated product diversification
as they grow as a response to opportunities. Their size, lack of
specialization, and ownership structures are some of the issues
such groups may encounter in the long-run.
Lee, K., Peng, M. W., & Lee, K. (2008). From diversification
premium to diversification discount during institutional
transitions.
Journal of World Business, 43
(1), 47–65. doi:10.1016/j.jwb.2007.10.010
The growth in the BRIC economies is predominantly accredited
to the rise of a new middle class, demarcated as a population
with annual income between USD 6,000 and USD 30,000 in PPP
terms, by Goldman Sachs. The middle class is estimated to be
about 1.7 billion people in 2009, and is expected to rise to 3.6
billion by 2030. This upsurge to 85% is expected to be from
EMs (Lawson & Gilman, 2009).
BRICs constitute 40 per cent of the world’s population and 25
per cent of the world’s land area. While China and India are
global suppliers of manufactured goods and services, Brazil and
Russia are more focused on supplying commodities.
BRICs have invested heavily in education, foreign investment,
and motivated entrepreneurship while initiating economic and
political reforms to allow companies to enter the world
economy. Thereby, BRICs’ importance in the next decade is
expected to increase and they are expected to contribute more to
global growth. Also, the entry of millions of customers from the
BRICs into the middle class is significant, which means a huge
market growth opportunity for marketers.
Lawson, S., & Gilman, D. B. (2009, August 5). The power of
the purse: Gender equality and middle class spending. Global
Markets Institute, Goldman Sachs. Retrieved from
http://www.goldmansachs.com/our-thinking/investing-in-

women/bios-pdfs/power-
of-purse.pdf
The escalation in the economy in EMs has led to greater
urbanization levels and, as discussed beforehand, a surge in
urbanization gives many signals in the economic structure of
EMs.
With the development of cities, the necessity for infrastructure
and investment rises. Furthermore, as populations move to
cities, they usually enter the conventional workforce, and the
magnitude of the employed population offers substantially
higher incomes. In comparison, urbanization spearheads change
in the consumer’s way of life and preferences, and these
changes are dissimilar in every market (Chu-Weininger &
Weininger, 2009).
The utilization of higher-end commodities rises with higher
income (Budhwar & Varma, 2011). As utilization increases,
compared to income, pressure shifts toward the use of durables
and away from the consumption of core goods.
The rapid growth in the middle-class population demonstrates a
rise in the need for value-added products such as automobiles
and technology merchandise. An increase in urban populations
also presents openings in respect to infrastructure as cities are
challenged with the need to find ways to help the rising
population (Wilson, Kelston, & Swarnali, 2010).
Chu-Weininger, M. Y. L., & Weininger, M. A. (2009). Cross-
cultural markets and consumer behaviors: The case of China and
Turkey.
Journal of Euromarketing, 18
(1–2), 189–198.
Wilson, D., Kelston, A. L., & Swarnali, A. (2010). Goldman
Sachs global economics, commodities and strategy research,
BRICs Monthly, 11
(6), 1–4.
Budhwar, P. S., & Varma, A. (2011).

Doing business in India: Building research-based practice.
New York, NY: Routledge.

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