[...]... player and being strong in emerging markets The reality is less glorious Time and time again, companies enter new markets with little understanding of what they are getting into, and then wonder why their often smaller competitors are beating them hands down Thorough preparation is essential for success Leadership and support in the form of finance and other resources must come from the top of the corporate... product-related or human 9 EMERGING MARKETS Set high standards and benchmark against the best Successful companies frequently ask themselves what ideal they are aiming at in emerging markets They set criteria and then see what they can learn from the companies that are best for each criterion Understand that business in emerging markets is more timeconsuming Everything takes longer than in the developed world... management and those on the ground If an outside expert talks about the opportunities and risks of business in the market, it adds credibility to the local management’s arguments In a globalised world there is a growing tendency in business to believe emerging markets are less foreign, less different, than they are Senior managers have to be made aware of these foreign differences and the differences they... understand how long it will realistically take After all, time is money How expensive is the operational environment and what is the outlook? How expensive is it to build a brand and what is the outlook for advertising prices? How much time will it take to do what is necessary to get the business off the ground? 25 EMERGING MARKETS The internal audit Detailed and continuous understanding of the external... high are social security contributions and what is the outlook for them? Is the labour market hot (is there a lot of poaching) or not? What is the outlook? How educated is the labour force? How unionised is the local labour force? What is the incidence of strikes? What are the main weaknesses of the labour force? Which areas will require most training? What are the most effective ways of recruiting... of the people running the operation on the ground, there will be bad years and there will be good years, even spectacular ones Also keep in mind that not all global emerging markets are down at the same time The encouraging news is that there are, in virtually all emerging markets, more good years than bad ones In other words, there is steady long-term growth of revenues and profits But both good and. .. despite the efforts of forecasters to predict the future Establish different performance criteria for emerging markets Managers operating in emerging markets need to be judged according to different criteria from those operating in developed markets Performance criteria should focus on sustainable medium- to long-term results 16 MANAGING CORPORATE EXPECTATIONS Pay and rewards should be linked to these and. .. labour law and what is the outlook for it? 23 EMERGING MARKETS Taxation What are the current levels of taxation? What are the planned changes to the tax system? What kind of “less obvious/hidden taxes” exist in the market? What kind of tax holidays and incentives exist at national, regional and city levels? What is the outlook for tax incentives? How frequent are tax inspections and are they carried... companies should understand the pace at which it is possible to run the business and budget money and time accordingly Don’t ignore emerging markets because you think they are too small With low economic growth and increasing pressure (for most businesses) on profit margins in the developed world, emerging markets can offer higher margins and higher growth Never take your eye off the ball It is really... time and money will be required? Are the ceo and senior management committed to supporting a systematic business development and providing the necessary resources? Note that the commitment of the ceo is sometimes not enough; other senior managers also have to support the project Is the product portfolio right for the market? Which existing products have the strongest chance of success? Can the business . Europe in Figures Pocket World in Figures EMERGING MARKETS Lessons for business success and the outlook for different markets Nenad Pacek and Daniel Thorniley THE ECONOMIST IN ASSOCIATION WITH PROFILE. illustrate the points made and we are grateful and indebted to the many executives who over the years have shared with us their lessons of business success and failure in emerging markets. There are. are aiming at in emerging markets. They set criteria and then see what they can learn from the companies that are best for each criterion. Understand that business in emerging markets is more