Saturday, January 16, 2010

Emerging Markets

Special concerns must be considered by the international manager when dealing with former centrally planned economies in transition. Although the emerging market economies offer vast opportunities for trade, business practices may be significantly different from those to which the executive is accustomed. F or example, General Electric and RCA helped develop the soviet electrical and communications. However, due to the political divide between communism and capitalism in the late 1940s. Former centrally planned economies and Western corporation had rather limited international business concern. Soci`list countries perceived international corporations as “aggressive business organizations developed to further the imperialistic aims of western, especially American capitalist the world over. Western managers, in turn often saw socialism as a threat to the market system and the western world in general.
In the emerging market economies, the key to international business success will be an understanding of the fact that societies in transition require special adaptation of business skills and time to complete the transformation. Due to their growing degree of industrialization, other economies are also becoming part of the world trade and investment picture. It must be recognized that these global changes will, in turn, precipitate adjustments in industrialized nations, particularly in the manufacturing and trade sectors. Adapting early to these changes can offer new opportunities to the international firms. Malawi provides an appropriate study setting on account of the recent shift from one party dictatorship to multiparty democracy against the background of traditional cooperation with the IMF and World Bank in policy formulation. World Bank and IMF had persistently opposed the strategy of elite agricultural expansion, inward looking industry and state expansion into the private sector. In their place, the Bretton Woods Institutions had suggested policies seeking to revitalize smallholder agriculture, promote outward looking industry and private enterprise. As a result intransigence of the previous regime the IMF and World Bank have taken advantage of political change in Malawi to push a reform program. The new regime is keen to bring rural agricultural sectors into the cash market economy, undertake privatization to ease off pressures on fiscal resources, liberalize industry to promote a competitive culture in business and also liberalize trade policies to continually integrate Malawi to the world trading system.
Often the international manager is also faced with state-owned enterprises that have been formed in noncommunist nations for reasons of national or economic security. These firms may inhibit foreign market entry, and they frequently reflect in their transactions the overall domestic and foreign policy of the country rather than any economic rationale. The current global trend toward privatization offers new opportunities to the international firm, either through investment or by offering business skills and knowledge to assist in the success of privatization. Such as in Chile, where privatized public enterprises increased efficiency and improved service.

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