Companies from emerging markets are better equipped to conduct Essay

Companies from emerging markets are better equipped to conduct business in other emerging markets - Essay Example Emerging markets could be referred to the low income generation economies, or could be the developing markets or the economies currently in the growth stage. The emerging markets have shown more growth in the recent years, as compared to the more developed markets and economies. In such economies every opportunity is exploited to its fullest and such markets are important strategic factors to be considered by the companies willing to grow in emerging economies. In these economies the higher growth leads to higher returns and higher demand for investment and capital which further leads to favorable movement in the flow of capital and currency alignments. The growth in incomes and products are also seen in these economies which are important detriments of patterns of demand and pricing of products. These days the most significant strategic choice faced by the global companies is investing in the right emerging market. (JAIN. 2006) It is estimated that till 2050 the BRIC (Brazil, Russia , India, China) economies will become large forces in economy of the world. According to these projections based on growth in GDPs, income per capita and currency movements, if everything goes right these emerging economies will become greater than G6 in US dollars terms. ... tion and high level of risks faced by these countries, there are chances that these projections could go wrong due to policy change or any other factor that can affect the economy adversely. (JAIN. 2006) EMERGING ECONOMIES AND MULTINATIONAL CORPORATIONS: Due to such enormous effect of BRICs on world’s economy and the impact it would have in future years, it has become increasingly important for the Multinational Corporations (MNCs) all around the world to realize the importance of these emerging markets and the benefits the investment in these can provide. The major characteristics that attract the investors in these markets are increasing demand and group of wealthy people, educated work force and opportunities for low cost production. Many large MNCs such as P&G, IKEA, Coca Cola, HP etc have realized the importance of these markets and have expanded tremendously in these markets. (VAN DE KUIL. 2008) Out of BRICs, India and China are the strongest in the race of these emergin g markets. It is estimated that in next 20 years these both countries will become more than the size of mature countries like UK or Japan. Today’s advances markets and nations will lose their position and a drastic shift in spending would provide opportunities to global markets. China and India both have world’s largest population which together holds 37% population of the world. The population living in the mid-income segment of these both countries is constantly growing which means a demand of products and services is growing rapidly. (VAN DE KUIL. 2008) REASONS TO ENTER EMERGING ECONOMIES: Many MNCs have strategically planned to enter these emerging markets due to various reasons. Firstly it has become hard for the companies to grow in the mature markets; therefore the companies are now