MNCs Need New Profit Strategy for Emerging Markets?

  • Seung Ho Park

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Why are MNCs finding it harder to turn a profit in emerging markets? Sam Park, CEIBS Professor of Strategy and author of Scaling the Tail explains how multinationals can sustain profitable growth in these markets. ----------------------------------------- Parkland Chair Professor of Strategy at CEIBS Seung Ho Park has co-authored the book Scaling the Tail: Managing Profitable Growth in Emerging Markets which has been published by Palgrave/Macmillan. The book advises that a new approach to emerging markets is needed if multinationals in the consumer goods and retailing sectors want to maintain, and increase, profitability. The findings presented in the book are based on in-depth field interviews, along with a survey of 253 managers in 10 countries, conducted under the auspices of a collaborative Ernst and Young team and the Economist Intelligence Unit. These findings indicate that the emerging market growth strategies that multinationals relied on in the past are no longer viable. Instead, these companies need to extend more recent advances in value-distribution, in which peripheral sales (those in the “tail”) outnumber traditional mass sales (those in the centre of any distribution). Specifically, the authors discuss how focussing on specialized market niches using high-end brands, flanking particular segments and product categories, developing deeply nuanced localization strategies, and installing supportive management systems are now important strategies for consumer goods and retailing companies who want to ensure their long-term growth in emerging markets. Both academic and practioner reviews for the book has been positive: “Creative, bold and contrarian, Scaling the Tail up-ends conventional wisdom about how to succeed in emerging markets and offers a fresh new formula for profitable growth.” Peter Williamson, Hon. Professor of International Management, University of Cambridge “As a leader in the global consumer goods industry, we have first-hand experience with the pressures of sustaining growth in an increasingly competitive global marketplace. Scaling the Tail clearly illustrates the key strategies and actions that multinational firms can take to ensure that they are in the group of high-performers in emerging markets.” Ehab Abou Oaf, Asia Pacific President, Mars Chocolate The book features a forward by CEIBS International Advisory Board Chairman Dr. John A. Quelch. Prof. Park’s co-authors are Gerardo R. Ungson, Y.F. Chang Endowed Chair Professor of International Business at the college of Business, San Francisco State University, and Andrew Cosgrove, Global Lead Analyst for Consumer Products and Retail at Ernst and Young, UK. Prof. Park was President of SKOLKOVO-Ernst & Young Institute for Emerging Market Studies and Chair Professor of Strategy at Moscow School of Management SKOLKOVO. He was the founding president of Samsung Economic Research Institute China and a member of the Academic Council at CEIBS. He has served as Division Chair of the Academy of Management and a board member of most major management journals and is a Fellow of the Academy of International Business.

Period21 Oct 2015

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