Emerging Market Procurement strategies for low-cost sourcing

Emerging markets are playing a key role in the realignment of major corporations across the globe. Where many larger companies have been utilising emerging markets in areas of low-cost sourcing already, with the level of innovation and economic growth in those emerging markets, they are now seeing them as playing larger roles for their companies. With an increase in revenue coming from these countries, more and more companies will be looking to include more than the use of their low-cost sourcing to satisfy the needs for their own businesses. With all of these changes taking place across the globe, the need arises for emerging market procurement services for smaller companies as well.

Not many Western companies have experience with handling resources on a global scale. In order to be effective, a company would need to have experience in locating low-cost sourcing in countries throughout the world, and not many do. One strategy a company could employ, would be to utilise a company that specialises in emerging market procurement. With help, smaller companies can learn appropriate low-cost sourcing and logistics strategies for themselves and enjoy increases in business and revenue. Companies that are actually taking advantage of opportunities offered in emerging markets are already enjoying this competitive dominance.

As well as seeing an increase in revenue by using the low-cost country sourcing for their products, many companies are also seeing an increase in revenues from these countries. This is due, in part, to the fact that with the economic growth in these countries, they have moved from only providing labour and manufacturing, to also becoming consumers of the products themselves. Aside from seeing emerging markets as low-cost sourcing, global corporations are now looking at them as new markets. With an increase in innovations from these countries, major corporations are shifting their focus to meet the demands of the emerging markets.

Currently, developed markets seem to be experiencing what can be termed as lifeless growth domestic product rates, whereas emerging markets have experienced significant growth and are expected to surpass the domestic markets by 2050. Companies that take advantage of this growth can expect to experience an increase in profits. However, they do so while taking a risk marketing to an unstable emerging market. For smaller companies this risk may be enough to keep them from taking advantage of these marketing trends all together, although they could still benefit from emerging market procurement for their own products.

Whilst most global corporations may be working towards expanding their business to emerging markets for the sole purpose of increased revenue, a byproduct of their business may be an improvement in the health and wellbeing of the local market. For smaller companies that make the effort, the societal impact may not be as great, but they may still enjoy an increase in revenue from the emerging market. As global corporations make the changes needed to exploit the increase in demand from emerging markets, the need still exists to have a strategy for emerging market procurement of low-cost sourcing to meet those demands.

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John Nollett
16.04.2014