Targeting Emerging Countries

The Dutch company Heineken reported a rise in profits in spite of a fall in sales. The net profits in the first half of the year were £510 million which represent an increment of 17% respect of the same period last year. Despite the fall in the beer sales in Europe, Heineken has managed to increase their profits. In their attempt to overcome the challenging economic climate in Europe and North America, Heineken bosses carried out cost-cut operations such as brewery closures in England.

So what lessons can be learnt with internalisation?

Heineken’s focus on developing countries is paying off. The company has developed a strong presence in Africa, Asia and South America.  This is another successful story about businesses that beneficiate from their operations in emerging countries and there are more examples. Telefonica has a presence in 15 countries in Latin America (and 42 countries worldwide). These operations represent 65-70% of their total customer base, 40% of revenues and about 40% of the operating income. In the first half of this year the revenue rose 5.4%. Last year the net profit increased by 2.4% making the company one of a few European telecom firms to report revenue growth.