Emerging markets refers to markets that are in a transition from developing to developed markets. They are as a result of rapid growth in the economy which results from heavy industrialization. This rapid growth leads to their economies growing at double digits thus their increase in revenue and resources. A good example is China which has surpassed the growth rate of the United States of America. Cavusgil’s (2013) study found the following: embracing of new technology by emerging markets has led to rapid growth of production (p.332).
Technology strategy will work effectively in emerging markets by making businesses to expand faster. Rapid expansion of businesses will lead to an increase in employment as more people are absorbed in the market. This will result to an increase in the revenue collection in form of taxes thus increasing the gross domestic product of a country.
Technology improves production quality of the human capital. This is as a result of individuals concentrating on how to improve quality of their products using the good technological skills at their disposal. Good technology leads to increased production output per unit labor leading to businesses earning increasing their output and revenue. This will lead to an emerging market to have a production advantage over other markets that have not embraced good technological standards in production as is witnessed in most under-developed economies.
Good technology leads to increased efficiency in both production and service delivery. This implies that the firms within this market will be incurring lower production costs making them sell their goods at lower prices thus gaining the market power. With the gaining of the market power, such emerging markets are able to influence the type of goods offered and the prices thus locking out other possible competitors from the market.
Technology enhances mobility of goods, people and availability of financial information. This will lead to lower production costs thus making their products to be cheaper to the consumers. Banks can issue credit at lower rates. According to Magnus, (2010) poor technology contributed to the financial crisis in 2008 in most developing markets. Therefore technology acts as a good predictor of the market behavior.
Technology makes emerging markets to have more competitive advantage in terms of uniqueness of their products. This will make consumers to easily differentiate counterfeit products from the original. A good example of this is Apple products in the mobile phones industry. This important attribute makes Apple to own a larger market share in the USA. In every emerging market, technology plays a very important role in its growth. The emerging markets have to keep on improving their technological skills in order to maintain or increase their market power. Since technology improves efficiency and reduction of production costs with improved qualities, it therefore forms part of the key strategies used by emerging economies which should be embraced effectively.
Cavusgil, S. T., Ghauri, N.P.and Akcal,(2013). Doing Business In Emerging Markets. London: Sage Publications ltd.
Magnus, G.(2010). Uprising: Will Emerging Markets Shape or Shake the World Economy? Chichester, West Wessex: Wiley.
Luthans, F.and Doh, J. P. (2012). International Management: Culture, Strategy, and Behavior. McGraw-Hill Education.