November 12, 2011

Many transactional giants have not pushed their R&D operations to innovate for the great mass of middle market consumers in developing countries, or tried to tailor products to local preferences, or even localized their marketing activities. For example, how does BMW's tagline, "The Ultimate Driving Machine", translate in China, where BMWs are usually driven by chauffeurs?

How do luxury companies change their product lines from the understand markers of status that are popular in the west to the "bling" that many emerging market consumers covet?

A few western companies do develop products exclusively for China and India, but most are content to skim the surface of these market's potential. Multinational subsidiaries in emerging markets must reorganize themselves so that they can cope better with two sets of pressures. On the customer side, they need to move faster, make more decisions locally and alter the incentives and career opportunities offered to employees. In other words, their front-end operations must become highly localized. Given the size of emerging markets like China and India, a high level of localization doesn't preclude economies of scale.

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