Recently I heard a podcast from Vanderbilt Owen Graduate School of Management. It had an interesting topic "Industrialization in Emerging Markets"। It was a 90 minute discussion but I am putting some interesting points which one of the presenters pointed to. With the theme as to how important is Industrialization in Emerging markets, emphasis was put in to how Public Private Partnership is must for this to happen. It was more of how one leads to the other. By the way Public here stands for local government, local non-profit organizations and Private means Multinational organizations like Microsoft, Coca Cola etc. From here onwards I am trying to put down the words of the presenter.
Why public private partnership is important for industrialization in emerging markets?
The issue which many multinational companies face right now is consistently finding new customer base in their current market and also finding resources/labor as cheap as possible since the competition is growing. Getting into emerging markets will help them to solve both the issues. Firstly they will have new customer base and also they will get access to cheaper labor and other resources and also improve their global image. The emerging markets also benefit since people get employment and Industrialization brings whole lot of other developments in the country.
But the companies are facing many business challenges in these emerging markets since they are going into countries like Chad, Somalia, Rwanda where they never thought they would be going. The challenges they face range from Human rights challenges to enterprise development , social challenges etc. and this is where the local government and organizations come into picture. The presenter gives two very good examples which pretty much explains everything about Public Private Partnership and why it works and make sense.
Coca Cola
Coca Cola sells products in 200 countries. It takes 3 liters of clean water to produce 1 liter of Coca Cola. By 2050 25% = 50 countries will not have clean water to produce coca cola. So one of the biggest challenges it has is how to conserve clean water so that after 2050 it can produce and sell there and around the world. The solution they have come with is to partner with the local governments to revise the policies on water usage, improve the efficiency of water usage, dig more wells in remote villages. They also have partnered with municipalities to build water cleaning plants at more places.
Star Bucks
Currently Starbucks faces a challenge to add variety in its coffee offerings. The solution they worked on is start growing coffee in Rwanda and import from there. Rwanda did not grow coffee before 5 years but with Starbucks and Rwanda government partnership now they grow and export coffee. This adds variety to Starbucks' coffee offerings and people in Rwanda get employment.
The reason I personally was impressed with the talk is that it seems now onwards big companies will have to consider emerging markets for cheaper labor and new customer base. Such symbiotic relationship will definitely help both entities here. I hope such efforts continue and I think they will until there are incentives for the companies to go into untapped markets.
Note: All credit about the information goes to the presenter of the talk.
Why public private partnership is important for industrialization in emerging markets?
The issue which many multinational companies face right now is consistently finding new customer base in their current market and also finding resources/labor as cheap as possible since the competition is growing. Getting into emerging markets will help them to solve both the issues. Firstly they will have new customer base and also they will get access to cheaper labor and other resources and also improve their global image. The emerging markets also benefit since people get employment and Industrialization brings whole lot of other developments in the country.
But the companies are facing many business challenges in these emerging markets since they are going into countries like Chad, Somalia, Rwanda where they never thought they would be going. The challenges they face range from Human rights challenges to enterprise development , social challenges etc. and this is where the local government and organizations come into picture. The presenter gives two very good examples which pretty much explains everything about Public Private Partnership and why it works and make sense.
Coca Cola
Coca Cola sells products in 200 countries. It takes 3 liters of clean water to produce 1 liter of Coca Cola. By 2050 25% = 50 countries will not have clean water to produce coca cola. So one of the biggest challenges it has is how to conserve clean water so that after 2050 it can produce and sell there and around the world. The solution they have come with is to partner with the local governments to revise the policies on water usage, improve the efficiency of water usage, dig more wells in remote villages. They also have partnered with municipalities to build water cleaning plants at more places.
Star Bucks
Currently Starbucks faces a challenge to add variety in its coffee offerings. The solution they worked on is start growing coffee in Rwanda and import from there. Rwanda did not grow coffee before 5 years but with Starbucks and Rwanda government partnership now they grow and export coffee. This adds variety to Starbucks' coffee offerings and people in Rwanda get employment.
The reason I personally was impressed with the talk is that it seems now onwards big companies will have to consider emerging markets for cheaper labor and new customer base. Such symbiotic relationship will definitely help both entities here. I hope such efforts continue and I think they will until there are incentives for the companies to go into untapped markets.
Note: All credit about the information goes to the presenter of the talk.
