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Emerging countrys economy can be described where income is lower to middle per capita and better GDP growth. Emerging countries that are making efforts to gain access to international markets and to broaden their economic horizon are generally understood emerging because of their continuous learning and advancements in business field through innovation. These economies cover around eighty percent of the world population and twenty percent of the global economies. Emerging economies are considered as transitional economies because they are in the state of variation from a closed economy to an open economy, for example Eastern European countries and former Soviet states. Heakal(2010)
Currency conversion rate function is also effective to lessen the local investor's desires to move their capital out of the country. An emerging market economy is very often gets aids and help from the rich donating countries or from the global organizations, for example International Monetary Fund or World Bank. Driscoll(1996)
Figure shows emerging economies sources revenues are greater than developed markets. Percentage of executive responses expecting a substantial increase in sales revenues over the next three years.
The culture of the countries is definitely different and the resources may vary as well. Some countries are rich in natural resources but they are poor in skilled labor, e.g., Saudi Arabia, Kuwait, Qatar, Ghana. The basic skills, information and knowledge needed to be successful are generally quite similar whether one is doing business domestically or internationally. There is endless innovation needed by Research and Development departments from the universities or the organization itself, such as Just in Time manufacturing systems or Lean Manufacturing.
Emerging Economies are spending funds in Research and Development and getting information from all types of surveys and think tanks to create innovations. Developed countries like Sweden offers free education for international students and in response Research and Developments institutions are getting research and innovations in different fields. Besides this, emerging economies are also facing challenges and obstacles throughout whole world.
2.Emerging Economies are becoming leaders in innovation :
Emerging economies like China, India and Brazil have enough manpower, natural resources and stable political conditions to step in any industry to produce sellable products and services throughout the world. These countries are investing enough money in their almost every sector to get better results to do some continuous innovative work.
2.1 Economic Growth :
Economic growth is the basic spotted reason for innovation in emerging economies in their respective fields. Economic growth is the main significant vision of emerging economies. Innovation is the base of invention and conversion of new information into new products, implementation or indulgence that fulfill market requirements. Therefore, innovative ideas are the reason of creation that is responsible for emerging businesses and no doubt are the primary commencement for growing businesses and industries.
Figure 2. China leading the pack
Figure explains that China leading the emerging economies and other economies are then in the queue to join. Percentage of executive responses expecting a substantial increase in sales revenues in each location over the next three years.
2.2 Competitive Advantage :
Organizations use and practice on their observations, get a boost in competition with other firms. Organizations participating in competitive advantage leave other behind which are laid back with the reflection of mighty, surviving economic progress and the accustomed corporational intelligence.
Here are few examples for that :
Michelin controlled the United States tire market when they were able to introduce radials.
Citibank left their competitors behind and made them feel out of the fashion by introducing ATM machines.
With the invention of compact disc, Japanese Sony captured the music and multimedia market of recording. Cohen(2010)
2.3 Business Survival :
Business survival is an important factor which pulls every organization on continuous improvement and innovation track. As once stated by Alan M. Kantrow(Harvard Business Review) "For companies to survive a discontinuity, they must face the rather unpalatable reality that there may have to be fundamental changes in who they are, what they do and how they do it, as wrenching and dislocating as it may be". In simple words emerging organizations are accepting transformations in global business market and they are acting accordingly to that. Olleros(2002)
2.4 Research and Development at Global Level :
Product manufacturers are trying to find research and development's supporting capabilities in emerging economies to less the product's cost by lowering staff wages and other government's tax to bring profit and valuable achievements in product design. According to the survey near about between two third organizations spent U.S. one billion dollar or more than that to find Research and development supporting locations in emerging economies, so its mean business organizations are trying to find all available sources to bring innovation. Many of the Business managers who earlier decided not to have enough Research and Development influence in emerging economies claimed that their organization has decided to initialize as soon as possible.
Figure 3. Research and Development professionals average over labor
Figure shows U.S. labor force is less R&D focused (R&D professionals are per 1,000 labour personnel) compare to other countries.
2.5 Talent Professional Hunt :
Product managers exactly know how to hire the right person, how to develop that person into a hardcore professional and then send that person into the right place to utilize his or her work strength. Human resource professionals in global manufacturing companies are trying to create a balance among HR policies to facilitate local and current cultural values. For example, these local values can start by giving more holidays and softer medical leave in Eastern Europe and Russia and strict performance assessments in India. Cohen(2006)
3.Challenges being faced by Emerging Economies to be leaders in Innovation :
With increasing compression of competitiveness and customers incline for better quality, constricted cost control and accelerated reply times from manufacturers are fast moving processes. The outcome of these actions are essential and apprehensible risk detestations. Brown(1997)
3.1 Energy issues and challenges:
According to the geologists, world resources are at catastrophic end specially in Middle East within next one hundred years. Brazil had oil related issues in 1973 and 1979 which took place during the military ruled government. No doubt Brazil is rich in natural resources but they have to import oil from other countries to fulfill their needs. Inflation was at the high-test peak in Brazil during 1970 which turned to be annually at forty percent. Bestwaytoinvest(2010)
3.2 Political Problems :
A political stabled country is aimed to get progress through continuous improvement and enhanced business infrastructure. Emerging economy like Brazil had military ruled during 1964 to 1984 and that brought catastrophic disaster to the economy. These were the effects which Brazil had to face during military ruled government :
During the time period of 1960-70 Brazil's economy started heat up
Inflation started rising annually by twenty percent
Government raised interests
Unbalanced prices of products from industrial outlets. Countrystudies(2010)
3.3 Property and copy rights challenges:
Manufacturer's facing risks in emerging economies are product's property rights and counterfeit products. This capability of managing possible risks will have continuous improvement as organizations develop mounting complicated globally recognized value chains to help their international operations. For example Samsung's new phone "Samsung Galaxy" is pretty much same in appearance and functions to Apple's Iphone 3gs.
4. Implications for International Competitiveness :
Competitiveness can be defined as an expertness of a country to encounter prosperously at international level and preserve that progress in real achievement and profit. Competitiveness cannot be measured in a unique shape. Corporeal measurement is the easiest form to measure competitiveness, which are labor cost per unit, Gross Domestic Product per worker and Gross Domestic Product's average in a long run.
In recent time, International manufacturers have become transparent and as a result of reduced problems of local trade, Europe's market accomplishment, American free trade agreement and reduced global trade obstacles through General Agreement on Trade and Tariffs. The incremented acceptance of global product markets is more inclined to have intense implications for national and domestic factor markets. Huge factor prices in any economy will take to a reduction of factors of demand there as native organizations can move production to a lower cost area or to a market with low cost opponents companies. RevisionGuru(2010)
5. Emerging Economies Maintaining status as leaders in Innovation :
In coming fifty years BRIC's (Brazil, Russia, India, China) economies would become a much bigger force in global economy. In less than forty years BRIC's economies would be considered huge and progressive due to their hard work in innovation. Demographic projects, models of capital accumulation and production growth, with help of all of these it can be figured out income per capita, Gross Domestic Product growth and currency shift in BRICs economies until 2050. (Jain, 2006)
5.1 Improve Value Chain Systems:
Leading manufacturers in emerging economies should improve their value chain systems by introducing new technology gradually. There should be a fast tracking system of products throughout whole world where delivery's location could be identified. Global value chain systems are needed to have adjustment to local facts and figures, for example, even its minus centigrade in Canada or it's a melting temperature in Middle East.
5.2 Rethinking value suggestions :
Industrial's equipment buying companies and large numbers of emerging market consumers should have enough knowledge of the market to demand the right product from the manufacturer. Manufacturers should produce products according to the needs of consumers in global markets, it means there is right demand and supply of the products in the markets.
5.3 Collecting ideas from employees, suppliers, customers :
The combination of employee's approximated ideas can be sorted out with the help of a certain process or via more congenial ways in small groups. The more methods an employee has to enter in the company, the huge the employee cooperation heads to less in administration staff.
At the stage when suppliers have more knowledge in their field, they might offer solutions for the organization's certain requirements. Creating relationships with customers are influential references as it builds a powerful ideas sources. Gaining feedback or advices from end clients is rather difficult task. For example, in retail business, feedbacks channels like drop boxes, 24hr help lines would benefit companies to solve complaints and recommendations.
5.4 Cooperation with institutions :
Renowned universities and industrial institutions should assist the companies to get new hints through cooperation agreement. For example, Indian based software solutions providing company Infosys, established campus company process which is called Campus Connect 8. Moreover, another significant problem is sharing data with academic institutions, because other competitors might take advantage of that data.
5.5 Group Brainstorming:
Brainstorming is a famous method in which a number of people exchange views and interact their ideas with each other even if it looks out of reality. The main point of this method is not blame ideas until the session ends. The most influential point of this method is that fact that several groups can release new ideas.
5.6 Outsource Innovation :
Outsourcing innovation and research methods of an organization may hold a budget saving in a long run and its also a significant cost reduction measure. The main benefits that a company can have by outsourcing innovation adds a reduction in technology and market uncertainty issues, dividing cost, scale economic and capability to join various abilities.
Emerging economies are trying to approach to global markets, normally they are taken as emerging economies because of their widened business activities and enhancements. Global manufacture's best strategy is to plan and avail chances to create, build, manufacture their products and service in emerging markets. But if they want to get success in long run then they have to continuously work hard rather than bringing small change to their existing products, controlling prices or using same sales methods. Multinational companies have reduced costs in production and engineering fields due to their own policies and external effects which can be political, geographical, environmental and many others.
Emerging economies are on a continuous track of bringing innovative brainstorming ideas to their customers. Economic growth, competitive advantage, business survival and many other reasons are the reflex that these countries are to trying to give their best. Research and Development is no doubt playing any important role in all organizations, therefore all famous companies are spending cost and time on their employee's training and project design. HR executives no doubt playing a vital role to hire and shape up the right force for the organization. Emerging economies are very often get involved in energy crisis, state's political problems, environmental and copyright issues. China is the biggest energy consuming country in the world, still they need to import oil, gas. Brazil had two times oil crisis and political problems in their past history which took them back in their continuous improvement process.
Emerging economies are maintaining innovation in almost every sector of their business life. Manufacturers are no doubt playing an important in bringing economies into the global market by bringing their innovative ideas. Competitive advantage is the main vision of a firm to grow business and packed themselves with latest business ideas. In all matters, the capability to create new ideas should be their first priority. If companies are resisting or confronting they will have no innovation. The change which they will get will be a response according to that conditions. When innovators are stepping forward or building ideas they are in a state to innovate some ideas. Finally, emerging economies are utilizing benefits of innovation to achieve competitive advantage and business growth.