EMERGING MARKETS

International Business in Emerging Markets

International Business in Emerging Markets

Introduction

This paper begins with presenting the concept of developed markets and the emerging markets. The study goes on to describe the marketing strategies employed by the firms in each of the two markets and the grounds for which they make investments in each other's home regions. Also, the scope, challenges, risks associated and the benefits of this investment is presented. And, in the end, the rationale for the difference in strategies adopted by the two markets' firms for Foreign Direct Investment (FDI) of each nation.

International Business in Emerging Markets

Before getting into the core concepts of marketing and the main theme of the research, let us first take a look at what actually are developed and emerging markets. Developed economies or markets, in investing, are the nations which are considered to the most mature and established and thus less risky. While on the other hand, the emerging markets are the nations that are still developing; some of the emerging markets are going through swift industrialization and growth. Such nations own securities markets which are making progress in the way to, but haven't yet reached to standards of developed countries. Emerging markets, compared to the developed markets, have smaller and fewer publicly business organizations (Ang & Michailova, pp. 551-576). The emerging markets might have weaker standards of accounting, lesser regulation and lower liquidity compared to the more developed markets like Japan, the US and several other European countries.

Emerging markets, in the recent times, have attracted significant attention from the investors in the developed countries because of their escalating proportions of stock market capitalization and global economic outputs. Complimentary demographics and high expectations of economic growth have made the emerging markets, well liked investments in spite of their distinctive perils that would be discussed in detail in the later section of this paper. Since there is not any definitive system for classification, the investors typically deem majority of Middle East, Latin America, Eastern Europe, Asia and Africa as emerging markets (Aybar & Ficici, pp. 1317-1338). Out of all the fast growing emerging economies, the four most prominent include China, India, Russia and Brazil. The investing firms at times make an addition of a supplementary layer by marking the nations as frontier markets that comprise less advanced and even smaller markets which might pose great hindrances to foreign investment of experience considerable political ambiguities; characteristics which may supplement to their instability.

Making international investments by the developed and emerging markets into each others' home regions assists in diversifying their portfolio. Despite the fact that the United States in the largest market of the world, the stocks of the US compose less than almost half of the inclusive market capitalization of the world. An investing firm that only holds local stocks would fail to benefit from the opportunities somewhere else. Despite, diversification may not guarantee a benefit or secure against loss in a moribund market, extending their portfolio through various nations may help the firms gain benefit from ...