Emerging Market

Emerging markets have become important target markets for international business. The reasons for it are as follows:

Growing middle class in emerging markets

Firms participate in international business to seek opportunities for growth through market diversification. The growing middle class in emerging markets has a significant influence in the demand increase for such firms. With a decent income, the middle class is able to purchase various consumer products, such as electronics, cars, automobiles, and services like health care.

High economic growth rates

Emerging markets usually enjoy high economic rates, and one of the distinguishing outcomes is the rapidly improving living standards. Because of it, the demand in high-quality products or even luxury goods is soaring. Therefore, emerging markets are ideal destinations for international corporations with the aim to earn higher margins and profit.

Emerging markets has treated as manufacturing bases for international business. The reasons for it are as follows:

Low-wage and high-quality labor

One of the reasons that firm do international business is to gain access to lower-cost or better-value factors of production. "Emerging markets are usually home to how-wage, high-quality labor for manufacturing and assembly operations". These factors would enable firms to produce products at a lower cost and further increase the market share.

Large reserves of raw materials and natural resources

Specific industry would have a high demand of raw materials and natural resources in their production. To gain the flexibility in production, emerging markets which enjoy large reserve of raw materials and natural resources would be considered as manufacturing bases.

Emerging markets has also been treated as sourcing destinations.

The medium level of education, economic and political freedom in emerging markets makes them excellent platforms for sourcing. For example, firms in IT industry can benefit from their ability to outsource certain technological function to knowledge workers in India. In such way, firms can obtain competitive advantage while concentrating on the core competencies.