Homework Question on Emerging Markets
- Michigan State University (my alma mater) provides an Index, which can be used to identify emerging markets from a variety of dimensions for several emerging countries. Go to globaledge.msu.edu/mpi . Which four indicators would you say would be most important to a company that plans to market laptop computers to emerging markets? Which two countries would you advise the company to enter first? Why?
- Paul Samuelson, a Noble Price Laureate, has stated that although the concept of Comparative Advantage is very simple that it is often the most misunderstood by the general public. Using the concepts of comparative and absolute advantage explain why you think it so often misunderstood. Be certain to include in your analysis why other considerations often may have led to this misunderstanding.
- The WTO has become a very controversial global organization. Why do you think this is so? Do you think this controversy will continue or will it become more accepted and become a stronger global organization? Why do you think so?
Homework Answer on Emerging Markets
For every emerging market that a businessperson plans to enter, there are several factors that he/ she has to consider to ensure that the right choice of market is made. For a company that wishes to sell laptops in an emerging market, the following are the factors that would be considered. The company would have to consider the receptivity of the market to ensure that those who are in the market are people who are able to use laptops.
The consumption capacity of the market would need to be evaluated to make sure that potential customers have the ability to buy the laptops. Thirdly, the company would consider infrastructure in the market. Some facilities like electricity are vital in the use of laptops, and thus if the market has no such facilities, it would not be healthy for the company to venture in. Lastly, the size of the market would be an important consideration to make.
The size of the market would determine the demand of the laptops, where less demand because of a small market would lead the company to low profits. Thus, it is not advisable to enter into the market. I would advise the company to enter into the Chinese and Hong Kong markets because they are the first two countries whose overall scores are high.Comparative advantage theory could be misunderstood so often because it uses ideas that are difficult to use in logics.