When it comes to international and global trade through globalization, one area of high value in the contemporary world is the emergence of markets. The emerging market, also known as the emerging market economies, is described as the former developing nations and economies that have achieved considerable economic growth, modernization, and industrialization (Cavusgil et al., 2016, p.232).
Due to this economic growth, nations have become an attractive zone for international business due to the increase in the middle class. However, some challenges are posed by the emerging market, like weak intellectual property protection, a factor that makes it risky or international businesses to consider operating in these areas. Thus, although there are opportunities that international businesses can tap into emerging markets like the middle-class purchasing power, the lack of strong intellectual property protection laws risks the survivability of international business in these economies.
Various opportunities are linked with the emerging market, making these economies a good place for international business to set up their activities. In emerging economies, there is a growing middle class in emerging markets which suggests that there is rising demand for various consumer products, such as automobiles, electronics, and other goods and services (Cavusgil et al., 2016, p.240). For this case, there is growing opportunity in this area where international business can highly benefit from the increase and rise in the middle class in emerging economies. Middle-class form an essential part of the economy as the economy’s potential is also measured through purchase power.
For the emerging economies to increase in the purchasing power is translated into the increase in the purchasing power of these economies; hence, places become more favorable for international business to set up their activities. Furthermore, emerging economies are economically viable due to increased demand for machinery and other crucial industrial equipment (Cavusgil et al., 2016, p.240). In this case, the demand for a lot of industrial and finished products is very high in the emerging markets, and hence these economies offer an increased opportunity for international business to conduct their activities and improve their profit from operating in these areas.
However, ether is various risks associated with an emerging market, and one of the significant risks associated with the emerging market involves weak intellectual property protection. Intellectual property protection is an essential aspect of any organization as it guarantees the ownership of its properties. However, when it comes to emerging markets, there is a high challenge in their ability to enforce intellectual property protection due to a lack of strong intellectual property protection laws (Cavusgil et al., 2016, p.245).
In this case, international business faces the central problem of being assured that their rightful ownership of their products and services will be protected when they venture into emerging economies. Property ownership is essential for the survival of an organization or business as lack of protection can result in duplication of products and services, and hence the market will end up being flooded with copies of products competing with the original products. Therefore the existence of wick intellectual property protection in emerging economies is a significant challenge that international businesses can face when they enter these economies.
In conclusion, opportunities and risks are associated with the emerging market for international business, which plays an impotent role in determining the survivability of international business in these areas. The growth in the middle class in emerging markets offers a better opportunity for an increase in purchasing power in these economies, hence beneficial and profitable for international businesses if they venture into these economies. However, the lack of strong intellectual property protection laws in emerging economies is problematic to international businesses as their product can be copied. Hence, opportunities and risks are associated with emerging market economies for multinational companies.
Reference
Cavusgil, S. T., Knight, G. A., & Riesenberger, J. R. (2016). International business: The new realities (4th ed.). Pearson.