The STeP team undertook a qualitative research study to understand the various organizational models deployed by major corporations as they entered specific emerging markets. Items considered included how different organizational models allowed for operating freedom within the firm and how the structure provided the firm room to grow and insulation from risk.
This resource can provide partners with models of success that other firms have deployed, yielding insights into factors that should be considered when planning emerging market entry. It should serve as a starting point for partners’ own conversations around emerging market strategy.
The framing study includes both summary research findings and three small case studies highlighting how firms have organized emerging market entry efforts.
Many questions were asked, such as:
- How have corporations chosen organizational structures for emerging market entry?
- What key variables drove such choices?.
- What is the range of “the possible” for firms to consider?
- How do different organizational choices address/compound specific strategic challenges?
- How can product selection and modification influence organizational design?
- What are key ways of insulating against risk while also embracing capacity to scale?
- How might the organizational model change over time?
- What are best practices of successful emerging market entries across different organizational designs?
- The choice of organizational proximity to existing lines of business was primarily driven by the choice to insulate or accept risk within the broader firm.
- Several key variables in target markets further drove choices of organizational structure: level of demand for company’s product-type; level of demand for specific products; and access to supply chain and distribution.
- There was no one-to-one correlation between specific market variables/challenges and correct choice of organizational structure; the decision is complex & highly contextual.
- Several themes emerged across successful case studies of various organizational designs: aggressive pursuit of local partnerships, commitment to local staffing and talent development, willingness to adapt and innovate any given model over time.