The emerging markets are a lucrative ground for foreign firms to undertake investments and generate profits. The rising middle-class population, improvement in the average income, and rapid implementation of globalization strategies in these emerging economies are all rapidly changing the global business landscape. It is paving the way for suitable business opportunities.
However, emerging markets like India are often subjected to institutional voids like inadequate intermediaries, efficient regulatory systems, and more. Therefore, foreign investors need to come up with customized strategies catering to such issues. If they fail, it will prove difficult for them to attain sustainability in the competitive market space.
For comprehensive support, foreign firms can also avail assistance from reliable strategy consulting firms in India. They must also take into account the following pointers while framing their market entry strategies.
Get to Know the Market First
Foreign marketers must first understand the market they are looking forward to investing in first. In emerging markets, the middle-class population forms the major customer base. The average middle-class income has risen considerably since the last decade. However, in comparison to the western counterparts, the disposable income of this group is still quite low. Hence there is a great focus on affordability. Foreign investors, therefore, must adequately understand their customer preferences and re-think their product lines with a greater focus on the price-performance ratio.
Assess Its Openness
A market that is not open to foreign direct investments and does not have a supporting policy is not suitable for business investments in the long run. Hence, foreign investors must ensure to invest in countries like India that support 100% foreign direct investments in the majority of its industrial sectors. Also, foreign firms must look for countries with favourable government policies and incentives that will reduce their investment risks down the line. Furthermore, to identify the right policies, foreign organizations can take help from a strategy consulting firm in India.
Understand the Distribution Network
Understanding the distribution network is also key to improve the supply chain in an emerging market. In most cases, while investing in emerging markets, foreign investors focus solely on the established distribution network. This is because the existing distribution channels promise supply volume. However, in emerging markets, a majority of the demand initiates from the middle-class segment in the rural or suburban areas. These consumers buy their products from local markets.
Hence, foreign investors must undertake thorough research and establish a suitable distribution network to supply to these masses. They should also focus on establishing proper warehouse facilities.
Look For Local Managers
Understanding the complexities of emerging markets is a hard nut to crack. These markets are overcome with instability. Volatile consumer demands, currency swings, fluctuation tax, and interest rate structures are common features. Hence, it is crucial to establish local managers or collaborate with market entry strategy consulting firms for detailed planning and comprehensive research.
Investing in emerging markets requires thorough planning and an appropriate execution to generate profitable ROI in the future. No standardized approaches can cater to the risks and hurdles associated with this market. Hence, it is extremely crucial to consult with market entry strategy consulting firms to customize market-specific business plans. This will help avoid the probable risks and offer scope for sustainable development.
Tecnova is a leading strategy consulting firm in India with over 35 years of industry experience. Tecnova has helped over 1400 clients across 35 countries worldwide enter India with comprehensive India-specific market entry strategies. From M&A support, Greenfield project management, HR support to Partner search, Tecnova assures end-to-end assistance.