End of Corporate Imperialism Analysis

Article Analysis - The End of Corporate Imperialism

* Corporate imperialism is when corporations view countries as targets, with mass amounts of consumers, who want modern goods and not as individual countries that are defined by their unique cultures and populations. This resulted in limited success.

* Five basic questions to ask to compete in emerging markets:

o Who the middle class are and what business model will serve their needs?

o What are the characteristics of the distribution networks in these markets and how are they changing?

o What global leadership mix is required to help foster business opportunities?

o What strategy should an MNC adopt relative to all the business units within one country?

o Will the local partners help the MNC to acquire knowledge that is necessary to operate effectively within the market?

* Who the middle class are and what business model will serve their needs?

o Countries such as China and India are keen towards having choices and frequently switch brands. This is due to these countries being oppressed from choices for over 40 years.

o The middle class in emerging markets should not be assumed to be similar to the middle class of the U.S. or European markets. Income levels are much lower than Western markets; where the U.S. and European's middle class make as much as an emerging market's upper class tier.

 Three tiered income pyramid for emerging markets

* Tier 1- responsive to international brands and are the top earners in their country; therefore, they can afford them.

* Tier 2- less interested in international brands.

* Tier 3- loyal to local brands and their culture.

* Below all these tiers exist another level of people who are unlikely to become active consumers anytime soon (the poverty stricken population)

 By neglecting these tiers, the MNCs are essentially entering the markets and appealing only to the top tier which consists of only a few percent of the population.

o Value must be determined relative to the country and customers a company intends to serve. A healthy balance of price and performance must be struck in order to maximize sales in an emerging market. Consumers in emerging markets are much more price conscientious and therefore expect more bang for their buck.

o Marketing through a one size fits all approach in the areas of product and advertising can result in foreign consumers not fully adopting and relating to the image a brand is trying to communicate.

o Some companies have tried to develop markets by changing consumer's habits in order to penetrate those markets and acquire a first mover advantage. However, this can be extremely costly and, if too costly, not worth the effort. It is much easier to provide products that accommodate the culture and require little to no education on how to use the product.

o Distribution capabilities must be taken into account for as some countries are not equipped to handle some product requirements (i.e. Perishables needing