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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 1and 2in 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:

  1. 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.
  2. Ongoing financing in infrastructure expansion incorporating divisions in transportation, energy, and communication results in reducing the expenses of trade in developing markets.
  3. Professional counseling and publicizing associations have made predicting for EMs less difficult to maneuver through business and societal structures within the markets.
  4. 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.
  5. 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.
  6. 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.htm



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 Webliographyfor 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


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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