Michael Egan

Chapter 1 Annotation
Prof. Goncalves
10/27/15
Simply put, this chapter pieces together the struggles of entering and succeeding in an
emerging market, with heavy emphasis on the struggles. Like any country, you will have the
usual troubles involving government, lackluster infrastructure, and an overall lack of talented
workers in specific fields. With that all that being laid out on the table, it can put massive
amounts of stress on an entrepreneur or any company going into a new market. As it says in the
book, it takes patience, perseverance, and assistance, which is all 100% true. In my opinion, I
feel like the hardest hurdle to get over in another country is their government and how they
operate. While dealing with new clients, you have an entire culture you have to account for. As a
businessman/woman, you are held to a high standard in your own regard and your company's. To
go along with the government struggles, infrastructure is a massive obstacle in itself. Developed
nations do not have a problem nearly as much as some Latin American societies or Eastern
European villages. Touching upon those developed countries, those societies have it much better
of in dealing with the WTO and other dealings with countries. A good example is noted in the
textbook and it briefly describes the effect the UN plays. ''...the 27 member countries allow for
labor mobility and a free flow of goods without tariff or non-tariff restrictions.'' It is obvious
from the reading that being a vital or important player in the UN is beneficial in the long run.
Now, it's important to note that you can't just join up and expect good things. It takes time and
you have to build up your economy in the meantime, hence, an emerging market.
At the end of page 1, and most of page 2, the author talks about India and its troubles
regarding foreign owned business coming into the country. For comparison, you have these
multi-national tele-marketing companies, albeit smaller in size, outsource many of their job
openings to the Indian population with seemingly no problem. The wages are most likely not
large but the point remains, thousands of telephone operators conduct a company's business.
Now with major companies, the Indian government is very, very concerned with the
displacement of the ''mom & pop'' stores in their economy, and it's a legitimate concern. These
types of stores are the backbone of smaller towns and such. They are considered the backbone of
America in business terms. They are the working and middle class...a class that is also
disappearing within our borders. With companies like IKEA wanting to expand, the Indian
government sees no need as the stores they have in place sell goods that suitable for their
population. To connect back to government policies, this is a prime example. This causes the
company, or companies, to grow extremely tiresome of the way a government operates. This is
not just India. Many countries are titled ''democracies'', but they still interfere in the free market
(see China). These massive populations that need jobs to put it bluntly. It's the way their system
works and it is vital these people find jobs as the repercussions are far too extreme. Along with

population inflation, (to a degree), China's infrastructure is rapidly growing. Most of the time
that is a positive thing to note, unfortunately not in this case. Entire cities and towns are
constructed with little to no population. This goes to show how quick their turnover is. Along
with that, they heavily invest in transportation, but other than that, nothing is there to show,
which makes it extremely difficult to operate in. To summarize, it all connects back to what the
book states about dealing with the unskilled or uneducated in an emerging economy. I takes
perseverance and the ability to stick with something for an extended period of time.
In this introduction, I had stated that the failure aspect regarding corporations and
emerging markets is heavily touched upon. While there are many of reasons, I feel that they can
be brought back to a few reasons other than management issues. For now however, these factors
can be categorized into two areas; internal and external. These internal factors take a peek into
resources, products, organizations, and risk. To go along with them, leaders need to ask
themselves questions that take into account these principals. On page 7, it details these FAQ's.
Out of that list, I feel that 'products' are a primary concern. Rather than be the first thing to think
of when going into foreign market, you have to acknowledge the culture you are in and ask ''Will
this product sell? Can I prosper?''. If someone hasn't answered that question by the time you are
in said market, you are fighting a losing battle. Externally, the main points of interest rely on
government, the market, and understanding the existing market. In this section, and also
depending on what you're selling, the government may be your biggest hurdle. As it was touched
upon before, they are the ones that oversee everything and ultimately decides what goes and
what doesn't. Just as much as much of a concern finances are, working around a government is
very risky business. Incorrectly assessing your surroundings and refusing to adapt is a recipe for
disaster in any market as you ignorantly denying the fact that you are wrong, therefore affecting
those around you and those who work under you.
When wanting to do business in an emerging market, you cannot just pick a random one
and just pray for the best possible outcome. Assuming the questions about politics and what
you're selling are answered, you have to choose the best suited market. Luckily, they are ranked
courtesy of Michigan State University. They designed a chart based off of 8 main criteria (mkt.
size, mkt. growth rate, mkt. intensity, mkt. consumption capacity, commercial infrastructure,
economic freedom, market receptivity, & country risk), and it details 3 areas of interest; target
markers, manufacturing bases, and sourcing destinations. These target markers represent the
demand for certain products. What is essentially being said is that every market has a niche and
you have to correctly drop your business within. Different cultures have their advantages, like
the book states, Russia is big on oil and gas, agriculture in China, and textiles in India. Moving
on we have manufacturing bases, and they look at the operations/financial side of things. A main
question is whether the wages match the output of their product. These are directly related to the
outsourcing of MNE's throughout the world. Lastly we have sourcing destinations, which is also
related to the outsourcing from MNE's. While the bases look at where to put these factories, the
destinations attract said companies. For example, Dell and IBM outsource technological

functions to intelligent works in India. It's a simple matter of giving the right work to the right
people to ensure their bottom line is not affected and quality products ship out.
To conclude the chapter, there are institutional voids that need to be addressed.
Institutional voids are defined as the absence of a middle man that connects buyers and
consumers. With questions being potentially un-answered, there are a few strategies that can take
place. A main strategy is the question,'' Replicate or adapt?''. This alludes to the strategy of
matching other companies ways of operating, or going out in the culture and analyzing and
hopefully getting an answer as to what works there.