Building and Sustaining Relationships in Emerging Markets

Building and Sustaining Relationships in Emerging Markets Relationships built by a business are the most crucial asset it can have, be it with financial providers, government, customers, suppliers or other stakeholders in your supply chain (Cavusgil et al., 2014). However, there are many hurdles to overcome when extending these relationships to international markets. Language and cultural barriers are one of the greatest challenges. For instance, in Mandarin speaking countries a business would be required to hire translators to communicate effectively with customers. In addition, various countries work at different paces and thus some customers can expect perpetual customer service.

Everyone has a responsibility to build a successful relationship for the business to adapt quickly to the foreign environment (Holm et al., 2015). For instance, organization’s management and employees create a positive relationship with the local authorities as well as the society in which they operate in order to ensure continuity of the business. The government creates favorable regulatory policies and measures to encourage local investment, protect investors/consumers, and control environmental externalities.

Entry into emerging markets presents a unique set of risks such as political risks, uncertain economics, foreign exchange uncertainties, difficulties in raising capital and poor corporate governance. Political risk can cause war, tax increases, and change of market policies, uncontrolled inflation and unfavorable laws regarding resource extraction. Civil war and other unrests can lead to a shutdown of industry, as workers could no longer able to do their jobs (Clark & Tunaru, 2015).

Currency fluctuations can have an impact on the total return on foreign investments. In most emerging markets, the banking systems are underdeveloped thus access to financing is uncertain. Poor corporate governance may result to very weak organizational structures whereby management or even the government has a greater say in the firm compared to shareholders (Henisz, 2015).

Compelling opportunities lure businesses into venturing into emerging market. The rate of GDP growth in emerging markets is greater than in developed markets. According to Morgan (2017), there is an increasing middle class, advancing technology and improving education systems resulting into growth in market consumption. Organizations can capitalize on the aforementioned opportunities to grow and expand into new markets.

Building and Sustaining Relationships in Emerging Markets

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