Ch 1: Emerging Markets Flashcards
Characteristics of Emerging Markets
Transitional Economy
Young and Growing Population
Underdeveloped Infrastructure
Increasing Foreign Investment
First-movers Advantage
a sometimes insurmountable advantage gained by the first significant company to move into a new market
Factors to consider when investing in emerging markets
Growing Economy
Reduced legislative burden
Market Saturation
Domestic Competition
Four Groups of Consumers in Emerging Economies
Global, Glocal, Local, Bottom of the Pyramid
Global Tier Consumers
consumers who want products and goods to have the same attributes and quality as products in developed countries
Glocal Tier Consumers
consumers who demand customized products of near-global standard and are willing to pay a shade less than global consumers
Local Tier Consumers
consumers who are happy with products of local quality at local prices
Bottom of the Pyramid Consumers
consumers who can afford only the least expensive products
Hypermarket
supermarkets and department stores combined together (ex: Walmart)
Supermarket
a large, self-service store that carries a wide variety of food, household products, and other goods, which it sells in high volumes at relatively low prices
Cooperative Store
a store that is owned and controlled by members of the cooperative who use the products and not an individual owner
Warehouse Club
a cut-price retailer that sells a limited selection of brand-name grocery items, appliances, clothing, and other goods at substantial discounts to members, who pay an annual membership
Main Street Store
a store that is located on the primary street of a town
Mom-and-pop Store
a small retail business, such as a grocery store, owned and operated by members of a family and often located on a main street
Cash-and-carry Store
a wholesaler that sells to retailers and other businesses at discounted prices on condition that they pay in cash, collect the goods themselves, and buy in bulk
Franchising
a license given to a manufacturer, distributor, or trader that enables them to manufacture or sell a named product or service in a particular area for a stated period
Joint Venture
a contract between two companies to conduct business for an agreed upon duration of time
Licensing
an agreement by which a company permits a foreign company to set up a business in a foreign market using the licensor’s manufacturing processes, patents, trademarks, and trade secrets in exchange for payment of a fee or royalty
Direct Investment
a method of entry in which a foreign company owns 100 percent of the company
Wholly-Owned Subsidiary
a parent company holds a majority or all of the shares of a subsidiary and controls all of its functions
Acquisition
the purchase of a company or asset
Greenfield Investment
a form of foreign direct investment in which a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up
