Strategy in Emerging Economies
Strategy is important for companies operating in developing and emerging economies. These businesses face distinct challenges and need to adopt a new approach if they want to be successful and stay relevant in today’s global marketplace. This starts by changing how managers think about how to build a business, or in other words, strategy.
Typical Strategy Errors in Emerging Economies
Companies in developing economies typically have lower costs, such as labor, and this might let them compete temporarily with rivals outside the country even if they are behind in operational effectiveness and their products are not distinctive. But cost advantages tend to decrease over time, and eventually companies in developing countries will need to address both of these issues if they want to stay competitive.
Company Transformation in Developing Economies
Companies in developing economies must eventually transition away from being very reactive and opportunistic to becoming more strategic, focusing on building a unique position, and developing something distinctive in the market. This means shifting the focus from relying on a cost advantage to thinking in terms of value, ideally of creating unique value in the marketplace.
