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Entrepreneurship in Emerging Economies

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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


1
Entrepreneurship in Emerging Economies
  • Entrepalooza 2001
  • September 14, 2001
  • Brent Chrite
  • Andy Lawlor

2
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

3
Brent Chrite, Managing Director The William
Davidson Institute
4
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
    scalable?
  • What are the skill sets, attributes and
    experiences in emerging markets that are
    necessary precursors to sustained entrepreneurial
    behavior?
  • 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
    industries

5
Economic Integration of Technology, Capital and
Markets
6
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
    construct
  • The state and civil society though distinct are
    best considered together
  • Civil society is the source of legitimation of
    state power

7
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,
    components)
  • Domestic operations integrated with
    parents/licensors global network
  • Products tailored to local/surrounding markets
    demand
  • Strong industrial relations skills
  • Effective supply chain management

8
Competencies Required In Emerging Automotive
Markets
  • Geographic domestic coverage/presence
  • Efficiency in production, delivering high
    quality, low price products
  • Focused product models to generate economies of
    scale
  • Vertical integration or partnership with key
    suppliers
  • Access to key foreign markets to effectively
    utilize excess plant/production capacity
  • Portfolio diversification to grow
    revenue/contribution
  • Strong industrial relations skills
  • Partnership with strong assembler and distributors

9
Emerging Market Challenges
Challenges
Questions
  • 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
    demand?
  • Is there adequate supplier interfaces?
  • Is production focused and balanced for maximum
    efficiency?
  • 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
    process?
  • 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?

10
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

11
Questions?
12
Andy Lawlor Director, Global MBA Projects The
William Davidson Institute, The U of MI
Business School
13
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
    advantage

14
Outside-In Challenges
  • Absence of Expected Basic Marketing
    Infrastructure
  • Little or no market data available
  • Nonexistent or poorly developed distribution
    systems
  • Relatively few communication vehicles
  • Unpredictable regulatory environments corporate
    strategy by government decree
    (caution they who give, can also take away!)

15
Outside-In Challenges
  • Playing by a different set of product-market
    rules
  • 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)

16
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

17
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
    learning

18
Emerging Market Strategies
  • Market assessment must focus on the long-term
    potential
  • 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

19
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!

20
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)

21
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

22
Questions?
23
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

24
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
    course
  •     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

25
William Davidson Institute Contact Information
  • Brent Chrite
  • 734.936.2772 / bchrite_at_umich.edu
  • Andy Lawlor
  • 734.763.5809 / alawlor_at_umich.edu

26
Entrepreneurship in Emerging Economies
  • Questions?

27
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