Despite career and commercial opportunities, talented colleagues with the right profile may be reluctant to accept assignments in emerging markets because they do not believe the rewards outweigh career risks. Corporate expectations, combined with a perception that resources and support may be inadequate, could also discourage colleagues from joining the team.  In addition, the corporate talent pool may not possess internal expertise for key roles (country manager, finance director, public relations), which can require recruitment externally. This can create issues initially due to the steep learning curve for new employees, particularly in terms of understanding a new corporate culture.

As a standard operating practice, corporations will often formulate market strategies during their budget process.  These strategies are usually detailed and provide success metrics for specific markets and regions.  However, unforeseen patent, pricing, political and economic issues can invalidate these strategies. 

Once a new market has been identified, corporations must determine the appropriate operating model constructs, align to the respective market strategy and make a decision in conjunction with subject matter experts. Is there a need to establish a new legal entity, a manufacturing facility, a joint-venture with a local firm? Or would a representative office suffice?  At a minimum, tax, operational and supply chain considerations must be assessed.

Market research is crucial in determining whether corporations should enter and/or expand in certain emerging markets. An integral component in the evaluation of an emerging market’s commercial potential is the inclusion of a robust risk profile.  Multiple factors beyond financial and operational risks need to be incorporated in the analysis, including those risks relating to reputation and compliance.  Headquarters should provide adequate resources to assist the local team in developing a robust internal controls framework to monitor and mitigate ongoing risk exposure

Emerging markets have their respective operational and cultural nuances.  In deciding the appropriate operating construct in a particular market, one important consideration is whether a local partnership would be advantageous.  Local partners may have crucial relationships with a multitude of stakeholders, which could be instrumental in accelerating policy decisions for a corporation. The appropriate local partner would also likely be more familiar with key decision-making processes in the various regulatory bodies. 

The selection process of prospective partners needs to be robust and include a cross-functional team to ensure alignment with core values, business practices and strategic goals. The merits of any partnership need to be weighed not only from a commercial perspective but in terms of reputation.  Finally, an oversight team should be formed to monitor adherence to contract terms by the respective parties relating to accounting requirements, business practices and the equitable allocation of resources.

Achieving financial goals in any market is heavily contingent on the appropriate identification of a distribution network.  Once customer demographics have been identified in an emerging market, a corporation should determine its distribution strategy.  Is it realistic to have customer reach of the whole country for a corporation’s product portfolio or should the focus be on specific regions?  In many markets, there are often distributors that have been established for many years and may already have the infrastructure.  Standard criteria should be used to properly assess the competencies and customer reach of a distributor or wholesaler.