How much importance Emerging Markets wield in the global economic landscape today is beyond debate. The financial crisis of 2008-09 and the havoc it wreaked on the world turned out to be a test of endurance and credibility for the Emerging Markets. With the decades-old, revered financial institutions failing and the US economy floundering, emerging economies in Asia and other parts of the world were bound to feel the ripple effects. However, when the dust settled, emerging economies, in an almost counterintuitive fashion, defied the odds and rebounded the highest even as the developed economies snailed into normalcy. MSCI BRIC Index fund (consisting of stocks from Brazil, Russia, India and China) managed to gain 80% vis-à-vis a somber 30% of MSCI World index (consisting of 1500 stocks from the developed markets). In the nutshell, what we witnessed in the stock markets was a reflection of the underlying growth stories that Emerging markets had been cultivating over the years. No wonder, corporations from all over the world are making a beeline to countries like India, China, Mexico, Brazil, etc, to get a stake in their respective  lucrative growth stories.

'Winning in Emerging Markets' is a comprehensive guide-book meant to equip individuals and corporations alike with a must-have framework as and when they contemplate on venturing into emerging markets. Technically, the book has 3 segments: a) Thread-bare analyses of factors that make Emerging markets a difficult place to do business in, b) Challenges faced by MNCs while venturing into developing markets and c) Challenges faced by Emerging market companies at home and in overseas markets. Authors of the book - Tarun Khanna and Krishna Palepu - kick things off by addressing the disconcerting question as to what distinguishes emerging markets from their developed counterparts. Duo explains that the telling differentiator is the absence of certain pivotal market intermediaries in emerging markets. Intermediaries are the entities that help bring buyer and seller closer by adding a tinge of credibility and information. Intermediaries such as market research firms, auditing firms, software development accreditation agencies, financial data-gathering firms, etc. are all significant to the conduct of frictionless business operations in any economy. The very absence or deficient supply of these informal institutions creates voids in the market, thus making it difficult for the MNCs to correctly gauge the success potential of emerging markets. Authors further highlight the lack of these important underpinnings in developing countries through some well-researched information. In a comparison of stark contrast, authors note that an entrepreneur caught up in institutional rigmarole in India or China normally takes 10-12 agonizing days to get his business started (filing registration and affiliated procedures) whereas in a developed market like Australia or Canada, he or she can get off the ground in 2 days time. Taking it forward, authors underline the fact that many advanced markets-based firms are often ill-prepared for their foray in emerging markets. Paucity of intermediaries in emerging markets could be a bewildering experience for developed market-based firms which are so accustomed to the streamlined constructs. In the nutshell, unless they have a way to negotiate or plug the pervasive institutional voids, longevity and profit-making in emerging markets could be a distant proposition for the developed market-based firms. 

After a solid introductory chapter, authors move on to the more important issue of spotting and responding to institutional voids. For anyone interested in investing in emerging markets, answering the thorny questions in authors' toolkit in second chapter is a must. There is an adequate and exhaustive list of questions that can really help the MNCs not just spot the loopholes but also gear themselves up to aptly respond to the institutional lacunae of emerging economies. Authors assert that failure to find an appropriate response to these voids often leaves MNCs serving only one segment of the market - the Global segment (Global segment has been defined by authors as the one where the rules of developed markets apply. Low Price Elasticity for High quality products and services) - much at the expense of ignoring the true, lucrative emerging middle class segment. Lack of commitment to successfully resolve these issues can leave these MNCs catering to the miniscule fringe of the vast market only, much to their chagrin. 

Authors further note that it's a fallacy to bracket all emerging markets into one Homogeneous club. For example, both China and India are vying for the attention of the developed world and both offer distinct advantages. Where China has a much better infrastucture to boast of, India has far superior capital markets to showcase. To make their point-of-view further teachable, authors have thrown in interesting case-studies of GM, L’Oreal, Tetrapak, Microsoft about their quests to strike gold in emerging markets; each faced with a distinct set of trials and tribulations. Authors also present four strategic choices for developed markets-based MNCs looking to do business in emerging markets: a) Replicate or adapt?, b) Compete alone or Collaborate?, c) Accept or Attempt to change the market context and d) Wait, Enter or Exit?. Case-studies of these MNCs make it amply clear that gaining success in developing markets is not easy, not by any yardstick. These MNCs when hit with the roadblocks initially, had to take path breaking decisions, for example, when it was snubbed by the Chinese Government in its early days in China, Microsoft instead of coming to grips with whatever was available decided to become a partner-in-progress. By investing heavily into the Chinese educational infrastructure, Microsoft ingratiated itself with the Chinese Government. Later, Microsoft turned out to be pivotal to the development of Chinese domestic software industry. In short, Microsoft hit the victory road in China by plugging institutional loopholes such as poor educational infrastructure, controlling piracy, building domestic software industry.  

Going forward, authors shine the spotlight on big companies from emerging markets that have expanded or on the verge of expansion into the advanced markets. Quite aptly, authors call such companies Emerging Giants. Much to one's surprise, authors conclude that the challenges faced by these Emerging giants are not any different from the ones faced by companies from the developed markets venturing into emerging markets. Moreover, emerging market companies are better positioned to leverage the institutional voids than their counterparts, courtesy their competitive advantage on local knowledge.  Authors, however, do warn against the complacency factor against competition since foreign firms with steep learning curves can soon catch up and make it a level playing field.

All in all, 'Winning in Emerging Markets' makes a great effort to bridge the information gap between perceptions and realities of emerging markets. The frameworks and toolkits provided in each chapter can motivate the powers-that-be in MNCs to ask some tough questions of themselves before they prepare to launch into emerging markets. On the negative side, book somehow doesn't lay as much emphasis as it should have on what can arguably turn out to be the massive roadblocks in emerging markets - Regulatory knots and Special interest groups. Nonetheless, with all its positives and a few negatives, I found 'Winning in Emerging Markets' an informative and knowledgeable read.