Here’s a simple phrase that may result in some real misunderstanding: "Emerging markets."

Calling a country "an emerging market" is no longer an accurate description. So let’s dust this concept off, consider what has changed, and see how we should be using this phrase today.

Once in a while in this blog, I take business jargon words and phrases and consider what they used to mean and what they mean now.

Currently, the concept of emerging markets is an especially interesting one to size up. This is because merger and acquisition strategy is on the verge of becoming hot, hot, hot and is impacting the status of emerging markets themselves. This could affect your company in a big way, and you need to be ready.

In the traditional sense, what we used to call emerging markets – such as Brazil, Russia, India and China – are so economically massive and important to the world now, and they’re growing so quickly, that the term really doesn’t apply any more. But, maybe we need to dig a little deeper.

Defining a market as emerging implies that the opportunity for intense, rapid growth exists, but has not yet begun. Some force – whether an innovation or an acquisition – has to knock over the first domino to turn potential energy into rapid growth.

Once this happens, the market’s status changes from emerging to high growth and eventually to mature status. At some future point in time, this cycle can turn to a redefinition state, where changes to the market or to the industry result in a whole new set of dynamics.

You see, I now believe that within a given country’s market, it is important to consider what growth exists by industry, not overall. For instance, where in one market a given industry is still emerging, for another industry, that same market could be high growth.

How does this work? Consider that in a specific country, the food and beverage industry can be mature, but in this same country, the pharmaceutical supply chain is being established and the industry is just emerging. Each industry in each country or region needs to be defined based on its unique characteristics.

Emerging markets may be crowded but also fragmented, and thus huge opportunities exist for growth. And often this growth can be initiated via an acquisition.

The key points that you should keep in mind when considering entry into these markets: Have a rigorous definition for your industry and base your acquisition strategy on your company’s opportunity for growth.

Do you agree that the term emerging markets needs to be viewed on an industry by industry basis and not be applied broadly to a country? What is your company doing in the way of defining emerging markets and laying a claim to capture this high growth potential?

More Resources:

M&A Podcast Series on the Global Supply Chain Podcast: Learn more about the series and subscribe to receive updates when a new podcast is available.

 

Executive Briefing: Sales, Inventory and Operations Planning: Crossing Organizational Boundaries

 

Photo credit: Dave Bleasdale