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New Business Models in Emerging Markets

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Summary

Western multinationals are looking to emerging markets for future growth, but find it difficult due to the cost-cutting required and the difficulty of creating viable offerings. The authors suggest that companies must devise fundamentally new business models to exploit the opportunity, which is represented by the "middle market" in emerging economies (people who struggle to meet basic needs with low-end options because high-end alternatives are beyond their reach). They must identify important unmet jobs, do them profitably at a price the customer will pay, and constantly test and adjust their assumptions. Companies have already created 20 new business models in developing markets, providing an example of what is possible.

Q&As

What obstacles are preventing Western multinationals from taking advantage of opportunities in emerging markets?
Western multinationals are struggling to exploit the opportunity in emerging markets by cutting costs and accepting profit margins close to zero.

What are the potential benefits of targeting the middle market in emerging economies?
Targeting the middle market in emerging economies offers the potential of vast demand for goods and services that will help them do the jobs better than any other current offerings.

What is the World Bank's Ease of Doing Business Index?
The World Bank's Ease of Doing Business Index ranks countries based on the ease of doing business in that country.

What strategies should companies use to create new business models in emerging markets?
Companies should identify important unmet jobs that consumers need to do, perform that job profitably at a price the customer will pay, and carefully implement and evolve the model by constantly testing assumptions and making adjustments.

What services are available to help companies exploit the potential of emerging markets?
Services available to help companies exploit the potential of emerging markets include investing, incubating, and consulting.

AI Comments

👍 This article provides an insightful analysis of the potential of emerging markets and the strategies needed to seize the opportunity.

👎 This article fails to address the cultural barriers that multinationals may face when attempting to penetrate emerging markets.

AI Discussion

Me: It's about new business models in emerging markets. It talks about how multinationals are trying to take advantage of the opportunities in these markets, but often struggle because they don't have the right business models in place. The article suggests that companies need to identify unmet needs, create new business models to address those needs, and then test and adjust those models by constantly testing assumptions and making adjustments.

Friend: That's really interesting. What are the implications of the article?

Me: Well, the implications are that companies need to look beyond traditional business models when entering emerging markets. They need to think of innovative new models that can meet the needs of the middle market better than the current offerings. This could be especially important for companies looking to expand into places like China and India, where there is a huge potential market. Additionally, companies need to be prepared to make adjustments as the market changes, as well as to test their assumptions frequently.

Action items

Research the current business models in emerging markets and identify potential opportunities for new business models.
Develop a strategy for creating a new business model that meets the needs of the middle market in emerging economies.
Test assumptions and make adjustments to the new business model as needed.

Technical terms

Disruptive innovation: A type of innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.
International business: The process of conducting business activities in multiple countries.
Emerging markets: Countries that are in the process of rapid economic growth and development.
Business models: A plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing.
Growth strategy: A plan for a company to increase its sales and market share.