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Entrepreneurship in Emerging Economies


Two Emerging Market Case Studies: Croatia's Push Toward An Entrepreneurial Culture ... Palestine As A Start-up: Financing Needs and Business Cluster Creation ... – PowerPoint PPT presentation

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Title: Entrepreneurship in Emerging Economies

Entrepreneurship in Emerging Economies
  • Entrepalooza 2001
  • September 14, 2001
  • Brent Chrite
  • Andy Lawlor

Todays Agenda
  • Opening Remarks
  • Brent Chrite
  • Andy Lawlor
  • Two Emerging Market Case Studies
  • Croatias Push Toward An Entrepreneurial Culture
    through Business Innovation Centers
  • Palestine As A Start-up Financing Needs and
    Business Cluster Creation
  • Discussion Questions

Brent Chrite, Managing Director The William
Davidson Institute
Emerging Markets Questions to Consider
  • With scarcity of private venture capital
    banking sector constraints, what are alternative
    financing mechanisms (e.g. DFIs)?
  • How can we consider optimal political policies,
    leverage national comparative advantages and
    induce private savings to make entrepreneurship a
    national phenomena?
  • How might micro finance mechanisms become
  • What are the skill sets, attributes and
    experiences in emerging markets that are
    necessary precursors to sustained entrepreneurial
  • What role can western institutions assume in
    contributing to entrepreneurship in emerging
    markets and therefore contribute to long-term
    development and the creation of competitive

Economic Integration of Technology, Capital and
Civil Society and Political Transitions
  • Civil Society is a useful formula for analyzing
    state-society relations in emerging markets
    because it embodies a core of universal beliefs
    and practices about the legitimation of, and
    limits to, state power….
  • Notions on civil societies
  • Civil society is a public realm between the state
    and the family
  • Civil is distinguishable from political society
  • Civil Society is a theoretical rather empirical
  • The state and civil society though distinct are
    best considered together
  • Civil society is the source of legitimation of
    state power

Key Success Factors in Emerging Market An
Example the Automotive Industry
  • Focused manufacturing processes
  • Rationalized product lines
  • Established export markets
  • Diversified product offerings (i.e., vehicles,
  • Domestic operations integrated with
    parents/licensors global network
  • Products tailored to local/surrounding markets
  • Strong industrial relations skills
  • Effective supply chain management

Competencies Required In Emerging Automotive
  • Geographic domestic coverage/presence
  • Efficiency in production, delivering high
    quality, low price products
  • Focused product models to generate economies of
  • Vertical integration or partnership with key
  • Access to key foreign markets to effectively
    utilize excess plant/production capacity
  • Portfolio diversification to grow
  • Strong industrial relations skills
  • Partnership with strong assembler and distributors

Emerging Market Challenges
  • Underperforming business processes
  • Poor customer satisfaction
  • End-customer
  • Dealers
  • Lack of effective partnering with suppliers and
    source OEMs
  • Functionality siloed organization
  • Bureaucratic structure
  • Have product models been rationalized to match
  • Is there adequate supplier interfaces?
  • Is production focused and balanced for maximum
  • Are there adequate resources/ processes, to
    forecast demand, production?
  • How quickly are problems resolved?
  • Are world-class service standards in place?
  • How integrated are dealers into the business
  • Are local suppliers leveraged?
  • Is the client involved in the parent/licensors
    global network?
  • Is product quality meeting end-customer and
    source OEM requirements?
  • Is there duplication of effort/function across
  • departments?
  • Are staffing levels above/below industry levels?
  • Who makes decisions?

Civil Society and Political Renaissance in
Emerging Markets
  • The ultimate depth, breadth and direction of
    recent political reforms remains unclear (Zambia,
    Kenya, Uganda, South Africa)
  • Multiparty elections do not by themselves produce
    or sustain democracy
  • They do not ipso facto institutionalize broad
    participation in political life
  • Democracy and parallel transitions from
    state-dominated to market-driven economies do not
    necessarily peacefully coexist

Andy Lawlor Director, Global MBA Projects The
William Davidson Institute, The U of MI
Business School
Outside-In Challenges
  • Market entrants, particularly multi-national
    companies, must recognize the unique character of
    EMs and differences across EMs
  • Business As Usual approaches often fail
  • Understanding culture and history of EM is
    mandatory and a key success factor the
    religions, social structures, and regional
    differences could yield excellent insights,
    marketing edges, and are sources of competitive

Outside-In Challenges
  • Absence of Expected Basic Marketing
  • Little or no market data available
  • Nonexistent or poorly developed distribution
  • Relatively few communication vehicles
  • Unpredictable regulatory environments corporate
    strategy by government decree
    (caution they who give, can also take away!)

Outside-In Challenges
  • Playing by a different set of product-market
  • High levels of product diversion
  • Widespread product counterfeiting
    (lost unit sales and damage to
    reputation quality image)
  • Opaque power loyalty structures
    (street-smarts needed to understand business
    political networks, and alternate channels of
    product delivery)

Outside-In Challenges
  • Questioning the parochial mindset
  • less developed countries will evolve smoothly
    into developed countries (which are assumed to
    be the higher stage of development)
  • Its best to assume that typical market
    evolution steps will be skipped or taken in a
    non-traditional order
  • The role of the internet in education and setting
    consumer expectations cannot be underestimated

Emerging Market Strategies
  • Non-traditional sources of first-mover
    advantage are often key
  • favorable government regulations
  • tapping pent-up demand
  • higher marketing activity to achieve brand
    recognition and early volume bursts
  • early and continuous consumer polling and touch
    points that lead to cultural and consumer needs

Emerging Market Strategies
  • Market assessment must focus on the long-term
  • Lack of data and stability often makes standard
    methods of estimating market potential and share
    difficult to apply
  • Building brand loyalty and share (and keeping it,
    staying ahead of the consumer needs cycle)
  • Data, data, data both trade and consumer

Emerging Market Strategies
  • Adapting distribution policy is key
  • Choosing partners requires greater emphasis on
    industry and regional/local knowledge, direct
    selling, local autonomy, and exclusivity
  • Preferred models and channels of product delivery
    will change over time will you be a leader or a
    follower? Decision speed is critical to success!

Emerging Market Strategies
  • Product policy adaptation may be a pre-requisite
    for success
  • EM customers may be just as sophisticated and
    value-oriented (if not more so!) as their
    counterparts in other no-advanced markets,
    willing/demanding to adopt new technology and
    product versions very quickly in the products
    life cycle (they see these advanced products on
    trips abroad and on the internet)

Emerging Market Strategies
  • Product policy adaptation may be a pre-requisite
    for success
  • A narrow line of proven (i.e., older!) or
    value-engineered (i.e., less full-featured!)
    may be insufficient

Two Emerging Market Case Studies
  • Croatias Push Toward An Entrepreneurial Culture
    through Business Innovation Centers
  • Palestine As A Start-up Financing Needs and
    Business Cluster Creation

The William Davidson Institutes
Global Project Programs
  •      Global Projects I - IMAP A 7-week UMBS
    core course
  •     Global Projects II A 14-week UMBS elective
  •     Global Projects III The William Davidson
    Institute summer internships.
  • These projects fulfill a dual mission
    1) help organizations solve an international
    business issue
  • 2) provide valuable professional
    development for MBA team members

William Davidson Institute Contact Information
  • Brent Chrite
  • 734.936.2772 / bchrite_at_umich.edu
  • Andy Lawlor
  • 734.763.5809 / alawlor_at_umich.edu

Entrepreneurship in Emerging Economies
  • Questions?

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