In a special report on innovation in emerging markets issued
in 2010, The Economist published an
interview with their Management Editor, Adrian Woolridge, highlighting the
changing nature of global business innovation.
His primary message is that emerging markets have shifted
from a cheap labor destination to a source of competition among multinational
companies all striving to reach large populations of potential buyers. He
compares this current trend to Japan’s development of lean manufacturing in the
1980s as a way to beat out American auto manufacturers. The Japanese were able
to beat Americans on price, reliability, and speed of new models to market not
through “industrial policy or state subsidies…but [through] business
innovation.”[1]
This concept applies to what we have been reading about Ikea’s product design
and delivery model[2],
as well Tata’s Nano. Both of these companies are “competing on price by
streamlining the supply chain and challenging conventional wisdom.”
Additionally, both Ikea and Tata Motors have designed products and delivery
systems by integrating greater modularity into their supply chain and
distribution strategies.[3]
Woolridge argues that both the challenges and opportunities
to competing in emerging markets are enormous. Dispersed rural populations and
variable infrastructure represent major hurdles, while the sheer number of
potential customers serves as an enticing draw to enterprising multinationals
and ambitious regional companies alike. They realize that, in order to take advantage
of these opportunities, they must come up with “smarter ways of designing
products and organising processes to reach the billions of consumers who are
just entering the global market.[4]”
Target customer strategy must reach beyond the global elite and focus on developing
and maintaining appeal among rising middle classes. Woolridge argues that this
will require a new approach to product development and supply chain systems.
As the emerging world continues to make growing
contributions to product and supply chain innovations, the conventional view of
globalization as a Western imposition on developing countries is changing. The
balance of economic power, too, is fluid as new consumers create unprecedented
demand for new products and services worldwide.
 |
| Source: http://www.economist.com/node/15879369 |
 |
| Source: http://www.economist.com/node/15879369 |
[1] "The
World Turned Upside down." The Economist. The Economist Newspaper,
15 Apr. 2010. Web. 04 Sept. 2012.
<http://www.economist.com/node/15879369>.
[2] Margonelli,
Lisa. "How Ikea Designs Its Sexy Price Tags." Business 2.0
(October 2002): 106-12. Print.
[3] Hagel,
John, and John SSeely Brown. "Learning from Tata's Nano." Businessweek.com.
Bloomberg Business Week, 27 Feb. 2008. Web. 4 Sept. 2012. <http://www.businessweek.com/stories/2008-02-27/learning-from-tatas-nanobusinessweek-business-news-stock-market-and-financial-advice>.
[4] "The
World Turned Upside down." The Economist. The Economist Newspaper,
15 Apr. 2010. Web. 04 Sept. 2012.
<http://www.economist.com/node/15879369>.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.