Emerging Markets
Emerging Markets
IntroductionDriven by globalisation, prevalent business environment is experiencing a profound transformation due to the spread of the market economy to essentially all nations and the liberalisation of global economic dealings (Mendoza & Irmak 2008). In society and world economies, a fundamental implication of the current globalisation today has been the evolution of the international expansion of emerging market enterprises worldwide (Luo & Tung 2007). It is imperative that international firms doing business within emerging and developing markets must preserve continual consideration of the opportunities and challenges of macro-environmental dynamics and the subsequent implications carried in each host country. Although these factors are all important for international business’ to consider, it is the understanding of culture in the sociocultural factor of the microenvironment framework that is a long term progression of integration, experience and knowledge that is undeniably the core of transnational successful business expansion. International business theories such as Hofstede’s Cultural Dimensions Theory reflect the underlying importance for a respect and understanding of culture that ultimately allow a business to thrive intercontinentally. There are a number of opportunities that international firms face when doing business within an emerging market. The Sydney Morning Herald article (Article A) “Why Jetstar wants to bring outsourced technology back in house” explores the concept of international business expansion of emerging market enterprises. Smith (2014) in his article recounts after an evaluation of the airlines technology schemes and assessment of the company’s contractor agreements, Jetstar’s information officer proposing outsourced work. Through Jetstar’s plan to conquest airlines in the emerging Asian Pacific region, they object to expand their international market share, widen their distribution and gain competitive advantage in the emerging market area (Smith 2014). However, like any other international firms wanting to expand across transnational borders, dissimilarities in the external legal, political, cultural and economic factors amongst home and host countries can pose either opportunities or challenges for a business venture. When international companies, like Jetstar, choose to do business with an emerging market they are subject to a new set of macro environmental factors, exposed to different restrictions and clashes subsequent from altered rulings, cultures and societies.
The political and legal environment in the home country, the environment in the host country and the laws and agreements leading relations between nations are all imperative for an international company to consider (Mortan 2014). External political and legal issues impact business arrangements as firms must conform to laws and regulations in each host country that can either limit or expand their prospects (Boddewyn & Brewer 1994). Limitations can be noted in The Business Review Weekly Article (Article B), “Twitter unblocked in China well, Dick Costolo has been at least”, where the issues of Internet censorship in the Peoples Republic of China is explored. China is one of the most attractive emerging economies at the present in relation to investment venture. However, internet censorship is led under an extensive assortment of laws and managerial protocols, restricting the expansion of growing international businesses such as Twitter, which has been blocked along with numerous social media sites in this emerging market. However, if successful in the political and legal environment, formation of multinational agreements can be established and would permit international organisations to present and combine their distinct strengths, as seen from the outsourcing of work in Article A, with their expansion of the respective emerging market. Corporations can then arise with improved ideas and concepts thus refining their goods or services, and widen their customer distribution. When dealing with emerging markets such as China, it is likely that companies may experience clashing between home and host national laws. Therefore, political influences and laws are essential for an international business to deliberate as they should endeavour to adopt them considerably into their business regime in order to be successful abroad. Another issue to consider is the world economic environment as fluxes in this area in diverse host countries can impact business expansion and efficiency. It is up to a company to be aware of market conditions as opportunities to be gained are throughout stages of high economic growth (Estelami, Lehmann & Holden 2001). When local markets in industrialised areas of the world become saturated, international business expansion of emerging market enterprises allow corporations to take advantage of developing nations undergoing economic and population growth. This can be noted in Article A through Jetstar’s expansion through the Asian Pacific region (Smith 2014) as economies such as China and India are undergoing high economic growth and are therefore seen as potential market expansions for many international companies. In addition, economic components relating to the numerous market characteristics such as population, income, consumption trends, geography and approaches toward overseas involvement in the economy all construct an opening evaluation of market potential for an international firm.