Emerging Markets: Lessons for Business Success and the Outlook for Different Markets

225 Pages·2004·0.79 MB·English

by  Nenad Pacek

EMERGING MARKETS
OTHER ECONOMIST BOOKS
Guide to Analysing Companies
Guide to Business Modelling
Guide to Business Planning
Guide to Economic Indicators
Guide to the European Union
Guide to Financial Markets
Guide to Management Ideas
Numbers Guide
Style Guide
Dictionary of Business
Dictionary of Economics
International Dictionary of Finance
Brands and Branding
Business Ethics
Business Strategy
China’s Stockmarket
E-trends
Globalisation
Successful Innovation
Successful Mergers
Wall Street
Essential Director
Essential Economics
Essential Finance
Essential Internet
Essential Investment
Essential Negotiation
Pocket Asia
Pocket 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 BOOKS LTD
Published by Profile Books Ltd
58A Hatton Garden,London ec1n 8lx
Copyright © The Economist Newspaper Ltd 2004
Text copyright © Nenad Pacek and Daniel Thorniley 2004
All rights reserved. Without limiting the rights under copyright reserved above, no
part of this publication may be reproduced, stored in or introduced into a retrieval
system, or transmitted, in any form or by any means (electronic, mechanical,
photocopying, recording or otherwise), without the prior written permission of both
the copyright owner and the publisher of this book.
The greatest care has been taken in compiling this book.
However, no responsibility can be accepted by the publishers or compilers
for the accuracy of the information presented.
Where opinion is expressed it is that of the authors and does not necessarily
coincide with the editorial views of The Economist Newspaper.
Typeset in EcoType by MacGuru
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Printed in Great Britain by
Creative Print and Design (Wales), Ebbw Vale
A CIP catalogue record for this book is available
from the British Library
ISBN 1 86197 408 6
Contents
Preface vii
Part 1 Lessons for business success 1
1 Why companies fail 3
2 Managing corporate expectations 11
3 Market entry preparation 18
4 Market research and business intelligence 28
5 Assessing political risks 32
6 Interpreting economic indicators 38
7 Eternal dilemmas: market entry, corporate structure, marketing 49
8 Reaching the local market 58
9 Manufacturing in emerging markets 65
10 Making acquisitions work 72
11 Dealing with corruption and crime 94
12 Human resources: myths and reality 103
13 Corporate social responsibility 109
14 Understanding and coping with emerging-market crises 115
Part 2 The outlook for different markets 129
15 The global economy 131
16 The business outlook 148
17 Russia: a detailed look 175
Appendices
1 Comparative tables 196
2 References 204
v
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Preface
Just look at these newspaper headlines: “L’Oréal Says Net Climbed 20%
on Strong Emerging Markets”; or “Emerging Markets Enable Nestlé to
Lift Earnings 13%”; or “Chinese Growth Helps to Lift Coke Earnings”. A
glance behind the scenes reveals that L’Oréal’s growth in China, for
example, has more than tripled since 1997, its Russian business is grow-
ing more than 50% per year and its sales in most other leading emerging
markets are growing well over 20% a year.
There is no doubt that emerging markets offer enormous opportuni-
ties to companies with strong growth ambitions. But although some
companies perform well in emerging markets, many that are equally
ambitious end up frustrated and far from reaching their initial targets.
The aim of this book is to help businesses avoid the mistakes many
multinationals have made in emerging markets. It covers everything
that businesses need to think about, understand and act on in order to
be successful in emerging markets. Real corporate experiences are used
wherever possible to 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 many references to conversations with and remarks made by
them, but as a professional courtesy and because it makes no difference
to the points we illustrate, we have chosen not to give names even
when conversations were on the record. Where names do appear, the
remarks and quotations were not made to the authors personally and
are in the public domain.
Wearegratefultoourformercolleagueandfriend,JeremyKourdi,who
encouragedustowritethebook;toDeliaMeth-Cohn,whohelpededitthe
book,providedadditionalexamplesandadvisedonthebook’sstructure;
tocolleaguesinTheEconomistCorporateNetwork,Asia,forinsightsinto
businessinSouth-EastAsia;andtoStephenBrough,PennyWilliamsand
MartinLiuforthepartstheyhaveplayedinthebook’screation.
We are also keen to hear from anyone who would like to share their
experiences of emerging markets or would like to know more about
The Economist Corporate Network. You can email us on nenadpacek
@economist.com and [email protected].
Nenad Pacek and Daniel Thorniley, March 2004
vii
this book is dedicated to
my wife, Antonia, and daughter, Nina,
and to my parents and sister (NP)
my wife, Maria, and daughter, Natasha, and to my parents,
Harry and Irene, and brother, Paul (DT)
1
LESSONS FOR BUSINESS SUCCESS