According to Peter J. Williamson and Ming Zeng, writing for the Harvard Business Review, Western businesses can cope better in these recessionary times by adopting cost-innovation strategies that have worked for emerging-market companies.
According to the authors, the unpredicatable nature of the current economic turmoil means that the traditional antidotes, such as evaluating risks, focusing on the core and reducing costs, will not be sufficient.
The business environment has changed so much, say the authors, that companies from several emerging markets are set to wrest market share from, or even take over, Western firms.
However, smart companies are able to spot the opportunities as well as the threats in a recession. Value for money has again become a strategic imperative, and lessons can be learned from the developing countries where consumers are traditionally value-conscious and have limited disposable income.
The authors suggest the following cost-innovation strategies that have been used to good effect in China, India and Taiwan:
- Selling high-tech products at mass-market prices.
- Developing products in emerging markets, then selling them everywhere.
- Growing mass markets in developing countries.
- Offering choice and customization.
- Turning premium niches into mass markets.
- Relocating stages of the value chain to emerging markets.
- Using the right channels to communicate your brand.