Vijay Govindarajan
On Underdeveloped Global Markets
"Let's not fool ourselves," says global strategy expert Vijay Govindarajan. "The post-9/11 world is a more complicated place to do business beyond your own borders. But that doesn't mean expansion should stop. On the contrary, the potential rewards for companies pursuing intelligent expansion strategies are increasing."
To illustrate his belief, he uses two countries that at one time were considered prime markets for expansion—Argentina and India—which have since seen reductions in foreign business activity.
"People focus on why things have happened and what can be done," says Govindarajan. "But what they forget are the givens that made these countries so attractive in the first place—like an established middle class, an educated work-force, and democratic institutions. It's important to remember that these attributes haven't disappeared. We just have to find innovative ways to leverage them."
Govindarajan believes that technology should be used to solve problems, and that one of the primary reasons overseas ventures fail is that companies apply existing models to underdeveloped markets. "Just because an $18,000 car or a 16-ounce bottle of shampoo sells well in the U.S. or Japan doesn't mean it will sell well in India," he says.
Despite this statement's logic, he believes many companies ignore it. Helping executives recognize the power of their technology and how they can use it to solve problems is something many participants take away from Govindarajan's courses, such as the Tuck Global Leaders Program, Global Leadership 2020, and the Smith-Tuck Global Leaders Program for Women. It's the kind of knowledge that's invaluable for executives seeking to broaden their global perspective and to recognize what they have to do differently to succeed in different situations.
"Don't look at how your company can transform an emerging marketplace to fit your business model. Look for ways you can use technology to make inroads in that marketplace—then apply what you've learned to make your company more profitable in your primary markets."
Vijay Govindarajan is Earl C. Daum 1924 Professor of International Business and director of the William F. Achtmeyer Center for Global Leadership at the Tuck School of Business.
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