Presentation that discusses about strategies that should be used by multi national companies (MNC) for their penetration to emerging market such as India and Indonesia market

2. Background
Journal Analysis
› Condition of the Emerging Markets
› Strategies Implemented in Emerging Markets
Analysis
› What strategies should be implemented by MNC
in EM markets
Conclusion

3. Multi-national companies (MNC) entering
emerging markets (EM)
› Why MNC wants to enter emerging market?
› Where is the emerging market?

4. # 1 : Market
for
of potential
customers.
# 2 : This
segment
have the

5. India
Indonesia
Brazil
China
Mexico

6. Background
Journal Analysis
› Condition of the Emerging Markets
› Strategies Implemented in Emerging Markets
Analysis
› What strategies should be implemented by MNC
in EM markets
Conclusion

7. Prevalence on informal sector
Social contracts prevalence over legal
contracts
Lack of skill by traditional partners
Societal impact must be felt by the
customers

8. Operate primarily in informal sector.
Does not represented in GNP
Poorly served
Some may have predatory pricing.
Growing fast
Have multitudes of informal activity, such
as unregistered assets, sustenance farming,
small enterprises, etc.

9. Relationship are grounded more on social
contracts than legal contracts.
Informal social boundaries dominate over
legal documentation.

10. Traditional partners, may lack the ability to
enter the market properly.
Traditional Partners :
› Minority of people
› Participate in formal economy
› Understand the global capitalist system
› Value Western products

11. Development of emerging markets may not
use established patterns
Who are the best partners?
› Non-profit organization
› Socially oriented institutions

12. Customer in emerging markets demand that
MNC will take greater role in society
problems, such as :
› Poverty
› Over-pollution
› Nature preservation
› Clean water
› Etc.

13. Challenge : Laws is not enforced properly.
› MNC entering the market will have difficulties
defending their patent, brand, and contracts
because of lack of enforcement mechanisms.
Solution : Westernization
› Firms enter in hopes of in time, the economy will
be Western-alike : legal contracts, better
protection, etc.

14. Challenge : The Westernization will not work.
Problem :
› Not all people want to act/be like Westerners (30-
60%)
› Not all economy will have the same “path” like
Western economic systems.
Solution : Firms must act not like corporate
imperialism.

15. Challenge : Global efficiency, national
responsiveness, and knowledge transfer to
maximize economic impact may not work.
› Social benefits influence economic condition
› Shared use of property is common
› Patents or brands may not protect successfully

16. Solution : Not focus on traditional methods of
development
› Decentralization
› Small-scale
› Have social benefits

17. Problem : Use of old metrics or existing
performance metrics
Results : Failure, due to wrong
assumptions.
Solution : Treat all convergence to EM as a
new business model, don’t use existing
business model.

18. Background
Journal Analysis
› Condition of the Emerging Markets
› Strategies Implemented in Emerging Markets
Analysis
› What strategies should be implemented by MNC
in EM markets
Conclusion

19. # 1 : Acknowledge that approach to
Emerging Market is a new business
model.
› Different strategies and capabilities
› Firms will need additional capability beyond
global capability and integration
› Some Western values may not be profitable

20. # 2 : Acknowledge that collaboration with
non-traditional partner will be necessary.
› Non-traditional partner will have more social
leverage.
› EM countries customer base choose based on
social, not economical point of view.
› Non-profit organization, community leaders,
village level leadership

21. # 3 : Acknowledge the locals as partners
› Local partners have better flexibility, have better
understanding of local market, may add local
content
› Product should not be taken “as is” from MNC’s
R & D, but co-evolved with local partners.

22. # 4 : Firms must bring positive impact to
the society
› Social impacts > Economic impacts
› Local capacity building
› Firms must care about social impacts

23. Background
Journal Analysis
› Condition of the Emerging Markets
› Strategies Implemented in Emerging Markets
Analysis
› What strategies should be implemented by MNC
in EM markets
Conclusion

24. Going to emerging market requires new way
of thinking, new way of doing business, new
way of business model.
Impact to society and social should not be
discounted, but nurtured to gain profit.
Firms must not force their own values.

25. For Indonesia :
› Indonesia as a customer base :
Local companies should work with MNC for profit
and social improvement.
Local companies should leverage their local
advantage, adding local content, adding local
knowledge and supporting entering MNC.
Local companies should push the MNC to put up
more positive society impact.