Investing in an emerging market is always riskier than investing in developed markets. This is because factors move faster than usual in the still-developing economies. These are experimental; people are always learning and adjusting to already established norms in the developed markets. There is a very high-risk factor present; one never knows where the market is going to go. These economies also depend heavily on developed markets. Any and almost every change in the developed economy would affect the emerging economies tied to it.
Due to globalisation, the whole world is like a tangled web. Any sudden movement in any part would cause a disruption in the whole web. The effect can be small as a light vibration, or massive as threads being torn apart. No one can anticipate how things are going to work out.
Working in an emerging market is harder. They are characterised as being highly spontaneous and volatile. You never know what to expect. However, even though working in this environment is challenging and risky, emerging markets give vitality to the global economy. Working in a challenging environment can be difficult, but it is also exciting. These markets yearn for innovation, they demand it. They give the opportunity and freedom to test out new ideas at a lower cost. Moreover, an already established brand can use emerging markets to try out new products or services without fear of alienating their existing customer base in their home country.
Northeastern University’s professor Ravi Ramamurti, in a conference on emerging markets, while talking about lean operations noted, “It’s always good to be a low-cost player, but striving to be high quality.”
Working in emerging economies would require corporates to be alert as well as nimble. One should always be prepared to make adjustments. The market can go in any direction.
Anushka Singh