100% satisfaction guarantee Immediately available after payment Both online and in PDF No strings attached
logo-home
Emerging Markets Summary Lectures $3.21
Add to cart

Summary

Emerging Markets Summary Lectures

1 review
 62 views  0 purchase
  • Course
  • Institution

Summary of all six lectures of the course Emerging Markets for MSc at the University of Groningen.

Preview 3 out of 19  pages

  • October 24, 2019
  • 19
  • 2019/2020
  • Summary

1  review

review-writer-avatar

By: jannet1 • 4 year ago

avatar-seller
Emerging Markets Lectures



Emerging Markets Lectures
Lecture 1 – Introduction to Emerging Economies
Cons
- Extreme poverty and inequality
- Huge unmet demands but inadequate provisions

Pros
- Being new and raising new technologies; power of new technologies and innovations
- Aspirational population

Over time it can be seen that China and India had the largest share of
world GDP till 1700. The industrial revolution started and suddenly the
technology in the hands of Britain, US etc. made that they took over
the world economy (China almost gone). From 2000 the re-emergence
from China and Japan.


Strategic Decisions
Strategy: major decision, you only take it once in a while
depending on certain changes (acquiring another brand/firm).
Long-term oriented, goal-directed decision.
Tactic: small decision, 20% discount on certain products

When is the decision a strategic decision?
- Who is making the decision? CEO, CFO etc.: strategic
decisions.
- What is the scope of impact?
- Commitment: in terms of money
o Investments (big)
o Relationships (JVs)
o Promotions (ads)
o Policies and procedures (systems, structures)
- Scope of the firm:
o Where is your market, what kind of products?
o How will the decision have any impact on the
economic value of the value of the firm.

Strategy is the dynamics between ‘firm’ and its
‘environment (business, institutional, political etc.) due to
the ‘actions’ taken and the use of resources in order to
achieve goals (increase performance).




1

, Emerging Markets Lectures


Naming Emerging Markets
- BRICS: Brazil, Russia, India, China
- MINT: Mexico, Indonesia, Nigeria, Turkey
- CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa
- Emerging Markets
- Transition economies
- Newly industrialized economies

Common factors
1. Low income; low income per capita
2. Rapid Growth; high GDP growth (5% or higher), high economic growth rate
3. Undergone major market reforms or liberalization
o Reduced role of government (facilitator); competition is the leader and decides the regulation.
o Privatization of SOEs (state owned enterprise)
o Lowered barriers to trade and investment
o Level playing field for business activities; everyone gets the same treatment, laws and
regulations are the same for all the firms in the particular market.

FDI going into emerging countries is
increasingly going up, FDI out of emerging
markets has risen but is still dominated by
developed countries.

2014: shrinking of economic growth Europe.

Emerging countries cannot take it for granted
that they keep growing. E.g. Brazil, South
Africa, Venezuela. The growth markets are
dynamic and constant evaluation is needed.

What makes emerging markets unique for
business?
Pros:
- Huge unmet demand for products, services and technology.
- Young and growing population: tremendous opportunities for growth
- Heterogeneous market segments: something for everyone. So much difference in terms of choice
and preferences.
- Low cost and skilled labour: global production centre.
- Unique conditions: new frontiers for innovation. New requirements of consumers

Cons:
- Difficult and unstable market conditions; no first mover advantage
- Poor infrastructure and information flows
- Heterogeneous demand: hard to focus on several products, you cannot easily push costs down.
- High income inequality
- Huge intra-national diversity: e.g. 23 languages in India.

Lecture Two – Emerging Market Features

Emerging economies – The Economist

Emerging Market Features
A. Frequently prone to market failures; supply and demand will not meet.
1. Information problems


2

, Emerging Markets Lectures


 Rodamas as a reliable partner to comply with local regulations
2. Misguided regulations (political gains over efficiency)
 E.g. Indonesian laws and policies changed with the dictator power
3. Inefficient or lax enforcement or contracts/law
 Indonesian courts could not be trsuted with property rights cases
B. Rapidly evolving institutions (e.g. dictators in Indonesia)
1. Too much too fast (unexpected events)
 Asia financial crisis (1997), India and Russia debt default (1990s)
2. Dismanteling existing systems and building new ones
 New system for tax collection in India (2017); privatization and listing firms in
Chinese stock exchanges
3. Political and economic instability/uncertainties
 Frequent government changes: India (1990s) witnessed 4 national elections
and several govt.
 Dictatorship preferences: Indonesia, Philippines, Turkey etc.
 Dictatorship ideology swings: Argentina in 1990s, Brazil in 2010s
 Policy shifts: form import substitution to export promotion in Indonesia
(Rodamas).
C. Underdeveloped strategic factor markets (outside of the company; infrastructure, labour etc.)
1. Capital markets: high costs of capital, forex restrictions
 Connections with local banks helped Rodamas
2. Labour markets: shortfall and mobility constraints
 Lack of qualified people in management and sales (Rodamas)
 Labour regulation and policies (hoe easy/hard to hire and fire)
3. Product markets: input quality; infrastructural voids
 Poor distribution infrastructure in Indonesia
D. Missing intermediaries (bringing services to bring sellers and buyers together); Impact of
Missing Intermediaries: ease of doing business rankings
1. Credibility enhancers
 EQUIS (education), ISO (quality), Credit rating (BKR)
2. Information analyst/advisors
 Market research, investment banks, financial advisors
3. Aggregators/distributors
 Private equity, incubators, mutual funds
4. Regulators and enforces
 Russia lacked equivalent of OSHA (safety) or FDA (equity)
5. Adjudicators
 Huurcommissie NL
E. Governmental intervention and control over economic activities
1. Direct participation via SOEs
 Nationalization of banks in Indonesia
2. Facilitate national strategic interests
 Chinese government’s backing
3. Political opportunism to stay in power
 E.g. to provide jobs, develop specific regions etc; Suharto in Indonesia
preferring select group of ethnic Chinese business leaders etc.
F. High intra-national and sub-national diversity
1. Income levels
 4.4 billion people earn less than $10 a day
2. Tastes and preferences
G. Informal economy (grey market) dominates the formal (white market)
1. Too costly or complicated to operate formally
 Mom & pop stores; roadside vendors
2. Need for unorganized support groups
 Home assistants in Indian and Chinese megacities


3

The benefits of buying summaries with Stuvia:

Guaranteed quality through customer reviews

Guaranteed quality through customer reviews

Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.

Quick and easy check-out

Quick and easy check-out

You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.

Focus on what matters

Focus on what matters

Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!

Frequently asked questions

What do I get when I buy this document?

You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.

Satisfaction guarantee: how does it work?

Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.

Who am I buying these notes from?

Stuvia is a marketplace, so you are not buying this document from us, but from seller etimmer4. Stuvia facilitates payment to the seller.

Will I be stuck with a subscription?

No, you only buy these notes for $3.21. You're not tied to anything after your purchase.

Can Stuvia be trusted?

4.6 stars on Google & Trustpilot (+1000 reviews)

52510 documents were sold in the last 30 days

Founded in 2010, the go-to place to buy study notes for 14 years now

Start selling
$3.21
  • (1)
Add to cart
Added