I remember listening to Kenny Rogers sing “The Gambler” growing up in my community. As many of you know, Rogers is a country artist. I was well aware that if my friends knew I listened to country music, I would have lost my ‘cool card’ among my rapped-crazed peers. Today, the lyrics of “The Gambler” still guide my business strategy.
“You got to know when to hold ‘em, know when to fold ‘em
Know when to walk away and know when to run
You never count your money when you’re sittin’ at the table
There’ll be time enough for countin’ when the dealing’s done
Every gambler knows that the secret to survivin’
Is knowin’ what to throw away and knowing what to keep”
If most senior leaders would guide themselves with this simple lyric, their organizations would be better off. For example, you find a good spot in the lake where there are an abundance of fish. You keep this secret, but then start sharing it with a few friends. Sadly, the word gets out about your special spot.
Finally, you find yourself squeezed out from your favorite spot. It’s a hot spot now. The fish are being topped out. Yet, people continue to fish there despite obtaining less fish and requiring more time to get the same results. Even though you love the spot and have a sentimental connection with this area, you abandon this location and move to another unknown location that shows plenty of potential. You moved not because you wanted to move; you moved because you are a fisherman who loves catching fish.
Likewise, today’s businesses are operating abroad in order to catch more fish and obtain more profitability. U.S. multinational companies, like Coke Cola and McDonalds, realize that America’s market is pretty saturated and riddled with hypercompetitions.
How many more burgers or cokes can Americans continue to consume? Additionally, companies hope to lower their costs by searching for a lower cost labor force. Charles Hill, author of International Business, suggests that outsourcing is systematic: “By doing this, companies hope to lower their overall cost structure or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively.” Therefore, emerging markets become more attractive.
The fragility of today’s world’s economies demands that businesses act more prudently and decisively about their market strategies. Emerging markets, which were once stigmatized with the name ‘Third World’ markets, will be a dominate player in the world’s future economy.
The top four emerging markets include China, Brazil, India, and Russia. According to Goldman Sach’s projects, these countries will overtake the seven largest industrialized countries (United States, Japan, Germany, France, UK, Italy, and Canada) by 2040. Antoine va Agtmael, author of The Emerging Markets Century, argues that the prominent role of emerging markets is in future commerce.
He predicts revolutionary changes due to these emerging markets and equates these changes to the second industrial revolution. Some of the key success factors for these emerging companies are the following: (1) an obsessive focus on quality and design, (2) brand building, (3) logistics, (4) being ahead of competitors in adapting to changing market trends, (5) acquisition savvy, (6) sustaining an edge on competition in information technology, (7) clever niche strategies, and (8) unconventional thinking.
Additionally, these companies have a hunger to compete since their success will improve their way of life. Sadly, many Americans do not understand the level of poverty that motivates these countries. Agtmael further notes: “A new breed of companies will play a critical role in producing this shift; a select number of which truly deserve to be regarded as world class.
In the face of these firms’ vigorous emergence on the world stage, there will be a temptation to go into protective mode….” However, globalization makes retreating a passive signal of being defeated in a world market. Therefore, U.S. companies like IBM and Google may see themselves fighting to keep their dominance from unrecognized firms from these emerging countries with a hunger to topple established U.S. businesses.
Discuss how U.S. companies can effectively address the competition from firms located in emerging markets.
© 2012 by Daryl D. Green