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.

Tax increases and austerity measures have turned Europe and the USA into challenging markets. The potential rewards of making a successful entry into an emerging market are considerable. There are several factors that make emerging markets attractive to business operations such as lower taxes and the fact that East Asian and South American countries have experienced huge growth in recent years and forecasted to continue steadily growing.

Nevertheless there are risks to be taken into consideration to avoid or minimize failure in new international markets and here are some tips to assist you in reducing your risks and increasing your successful launch:

•    Visit the country of interest, very important to get the feel for it!
•    Analyze consumer’s demand and competitors’ strategies.
•    Find appropriate and ethical partners to be perceived as a local company.
•    Take into consideration regional differences.
•    Create unique approaches to different sectors within your market
•    Understand cultural issues in order to bridge differences.
•    Spend time getting involved in local communities.
•    Learn the local regulatory framework.

An exhaustive analysis of the target locale and your business prospects will highlight the factors that affect the whole process and will lay the foundations for a successful business operation. If you need assistance with your international venture, research, language support, website translation then we are a call away.