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Organization Strategy and Effectiveness in Large Emerging Markets

In September Alec Levenson traveled to China to kick off a new CEO research agenda on organization strategy and effectiveness in large emerging markets. Countries such as China, India, Indonesia and Brazil offer unique challenges and opportunities to both multinational and domestic companies. These large emerging markets are characterized by:

  • Large scale of domestic economic activity
  • Growing middle classes that are large in absolute size (numbers) but small relative to the overall population
  • Domestic companies that know the local culture well and have succeeded traditionally by focusing on domestic, lower income consumers
  • Foreign-based multinational companies that traditionally have struggled to break into the market and serve the majority of domestic consumers

In this environment, both domestic companies and multinationals face the following challenges:

  • Do you build in-country operations with a domestic-only focus, international-only focus, or both? What are the structure, process and talent implications of choosing one over the other?
  • How can organization structures be built that effectively and flexibly serve the market in its current state of development, and also position the company for success as the economy and middle class grow rapidly? Do you target the middle class as is exists today, or as it is likely to exist in 5-10 years time? What are the consequences of making the wrong bet?

These issues are particularly acute for the large emerging markets. In contrast, countries that recently made the transition from developing to developed (for example, South Korea and Singapore), operated almost exclusively with an export-oriented development strategy. The existence in the large emerging markets of large and growing middle classes increases the options for companies in those markets, at the same time that the complexity and consequences of making the wrong decision are amplified.

The research and consulting work that has been done on organizations' ability to operate with multiple, potentially competing objectives (ambidexterity; efficiency and flexibility; global integration and local responsiveness; etc.) has addressed some aspects of these challenges. However, there has not been a strong focus on developed versus emerging markets issues. This new research agenda will address those issues directly, partnering with organizations that seek to improve their effectiveness in these markets.

To launch the research agenda, Levenson traveled to China in September, visiting Shanghai, Nanjing and Hangzhou. He met with potential research partners in Shanghai and at Nanjing University and Hangzhou University, and made presentations at the American Chamber of Commerce in Shanghai and at Nanjing University. China was chosen as the initial focus for the work because of Alec's background in doing work on China and Taiwan.

However, the research agenda can be easily expanded to include other countries in which the right partners can be identified. Participating organizations will benefit from feedback on how to improve their operations and effectiveness in the areas of organization design, leadership effectiveness, and employee attraction, retention, motivation and productivity.

Companies or individuals who are interested in participating in the work should contact Alec directly.

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