Entrepreneurship Across the Globe - Report Example

English Entrepreneurship across the Globe In the article “Doing good and doing Business at the Bottom of the Pyramid”, Agnihotriexplores the truthfulness of the prevalence of the idea that there exists a potential market in the bottom of the pyramid. By the bottom of the pyramid, the author means exploring markets characterized by poor people. Through an analytical approach, he sets out to explore the viability of the global business in poor markets. The key learning from this article is that it is possible for a multinational company to invest and benefit from markets where the poverty level is high. However, Agnihotri (591) states that there is need for any investor who approaches such markets to invest take new business approaches. First, Agnihotri (595) suggests that the entrepreneur must make a tradeoff between cost and quality of products in the organization. Secondly, he must create a business atmosphere where both the customer and the company benefit through quality improvement (597). The author gives the example of a soap detergent, Nirma, a soap detergent that won over people for its quality rather than price. The Coca Cola Company reduced its price to target poor people for higher profits in such markets. As such, the poor people are potential customers for global enterprises as long as the management treats the people not as mere customers but as stakeholders of the organization. There are numerous reasons why there is fortune below the pyramid or in markets where the poverty level is high. One of the reasons is because these markets carry a large number of people who can generate a large profit if they are committed customers to any organization. Investing in niches that are dominated by the rich people has benefits in that the purchasing power is high in these markets. However, many global organizations target these markets and competition sets in rapidly. Additionally, these markets contain a small population and profits considerably diminish in the onset of competition. However, below the pyramid, the populations are high and the purchasing power is low. However, a company that manages to invest in this market can reduce its price, like Coca Cola and generate high profits from a large in flow of customers. In addition, if such organizations focus on empowering the poor people, for instance by employing them, it is possible to increase their purchasing power. Therefore, it is crucial that global organizations shift their focus from top of the pyramid to the poor people in society. This way they can be able to profit from a large inflow of customers and reduced competition. The article “The growth opportunity that lies next door” by Geoffrey Jones focuses on the way in which a cosmetics company, Natura, profited from the neighboring markets. Natura is cosmetic giant that has ventured into the international market to differentiate in emerging markets. The company invested in the developed countries where the markets were stronger than those in the neighboring countries, only to experience a reversal of market growth in the end (Jones 140). After taking advantage of the domestic market, Brazil set out its global strategy targeting countries such as US and Europe where the demand for cosmetic products. However, the Company realized that the demand was reversing and it was tricky to find markets that matched its selling strategy. As a result, the company has resorted to the neighboring markets in developing countries where the demand is growing unlike the demand in developed countries that has reached a plateau. Therefore, the company has found it worthwhile to invest in countries such as China, India, and Latin America where new markets are emerging (143). The key learning here is that developing countries are becoming potential markets for global organization while the markets in developed countries have become less profitable. There are a number of reasons why developing countries prove to be profitable than developed countries. First, the emerging markets are developing rapidly unlike the developed countries where the markets are saturated and the demand in declining. As more people get employed in developing countries, and their income levels continue rising, the purchasing power in these markets is growing as well. However, in developed countries, the demand is stagnated and entry of more investors is promising more completion in the end. Therefore, these markets are slowly turning to be unprofitable and bad targets for many global investors. Natura has taken advantage of the growing demand in countries such as China, Latin America and Mexico. Jones (145) notes the rise in demand in Mexico by 7.5%, in Brazil by 13.3% and in Peru by 10.9%, while that of America rose only by 1.1%. This shows that demand in developed countries is stagnated while that in developing countries is growing rapidly. Additionally, there is less competition in emerging markets as compared to the case in developed markets. Therefore, while launching an international business strategy, it is advisable for a company to target developing markets like Natura have done, to take advantage of growing demands and potential future growth. Dacin and Nasra are among scholars who have ventured into research to identify the relationship between the government and entrepreneurs in the multination concept. By evaluating the institutional structures and depicting the government as an entrepreneur intuition, the two authors have drawn a close relationship between the success of multinational companies in new markets and the role of the government in the host country. Dacin and Nasra (583), through a literary analysis, evaluated the role of the government in promoting global business within a country, sampling the Middle East as one of the countries where the government influences market structure. In their conclusion, they identified that the government policies determine the political, economic and market stabilities within a country, factors that are very crucial for international investors. In the Middle East, political instability has undermined the market potential making these markets constrained and unprofitable for global investors. The tax policies and cultural limitations in these countries have suppressed this market and barred the entry of ne investors in the market (589-609). The key learning in this article is that the government is an important stakeholder in any business environment and the government-business relationship determines the success of investors in a country. On this note, every global investor must consider the government factor before entering new markets to ensure that the markets are favourable for business. Many global entrepreneurs have ignored the government factor while differentiating into different market. Undermining the government-business relationship in a country poses a potential risk of failure for multinational organization. In any given country, the government influences the economic, cultural and hence the market stability. In countries such as the Middle East, multination companies must consider the religious factor and the government role in streamlining religious conflict as this may affect business. For instance, in a multi-religion environment, political instabilities are likely to cause religious conflicts, which may split up the customers in end. The government policies in a country determine the entry strategy and the investment power of organizations (Dacin and Nasra 583-585). For instance, high tax rates discourage investors from entering such markets. Therefore, the government control and policy design may encourage or discourage external investors from entering this country. On this note, before launching an international business strategy, an organization must evaluate the government factor to ensure that the government-business relationship is cohesive and motivates external investors. Any organization that undermines the government factor is bound to fail as it is at the risk of incurring loss of customer, rejection or even low-income levels. On this note, evaluating the government factor allows global investors to distinguish potential markets and discriminate unfavorable markets. Works Cited Agnihotri, Arpita. Doing Good and Doing Business at the Bottom of the Pyramid. Business Horizons, 56, 2013. Dacin, Tina and Nasra, Rasha. Institutional Arrangements and International Entrepreneurship: The State as an International Entrepreneur. Entrepreneurship Theory and Practice, 2010. Jones, Geoffrey. The Growth Opportunity that Lies Next Door. Harvard Business Review, 141, 2012. Read More