The New Global Landscape: Where Do You Fit In?
How does the maturity of Asian markets affect your business? More than you may think. Professor Linda Lim explains.
ANN ARBOR, Mich. — The economic engine of Asia has shifted into a new gear — one that has profound implications for your business.
No longer merely exporters, Asian markets have growing numbers of savvy consumers and maturing companies ready to compete on the global business stage. If you're not thinking about how to adapt your strategy to deal with it, you risk being left by the side of the road, says Michigan Ross Professor Linda Y.C. Lim.
"In today's economy, classic 'Western' or international business practices don't always work when serving Asian consumers or facing Asian competitors," says Lim, professor of strategy. "Asia's emerging prominence is impacting global business in new ways, and smart players will adapt."
Lim, an expert in international investment and business strategy, teaches the fundamentals of this shift and how to deal with it in the Michigan Ross Executive Program. While it's impossible to know all the right answers, Lim shows how to ask the right questions so that you'll better understand how these changes affect your industry.
After decades of exporting and saving, Asian countries are now spending more, saving less, and increasing consumption and imports. Companies based in Asia are innovating at home and competing on a global scale. They've turned the tables on Western markets and firms.
"Asia will account for most of world economic and market growth for the rest of this century," Lim says. "Its size and active participation in international trade and investment means what happens in Asia affects other regions."
One of the main implications of this new dynamic is how companies will design products and services. Asian customers are replacing Americans and Europeans as the dominant global consumers. As such, businesses have to adapt to different customers with different tastes, income levels, and cultures. Simply tweaking an existing product for a new market may be a recipe for failure. The fundamental way companies innovate, design, source, and market products will have to change for the emerging Asian consumer marketplace.
"This was done for the American market half a century ago, and now there's a new dominant world consumer," Lim says.
A Different Playbook
Beyond calculating economic shifts and marketing for new consumers, businesses across the globe must be prepared for competitors and partners from Asia. Asian companies, some of them long-established at home, are entering developed and emerging markets and becoming global players. The playbook they use is often different, so it's a good idea to learn it.
For example, many Asian companies are less focused on short-term profits and willing to operate with lower margins and a longer-term payback period. Some benefit from government protection and subsidies. How does this impact your business decisions if you're leading an established company, or another rising Asian company?
"For years, business curriculum has taken for granted specific institutions and structures, such as large public companies in developed Western markets," says Lim. "However, Eastern and Western structures can be very different."
In the Executive Program, Lim covers the different forms of business in Asia — the Japanesekeiretsu, the Korean chaebol, Taiwan and Hong Kong small-to-medium enterprises, Southeast Asian family conglomerates, and government-linked companies. She explains both the advantages these business models enjoy and the challenges they face on the global business stage. Program participants learn to develop a strategy for their organization that helps them both work and compete with these companies.
Questions participants consider include, What's the best way to partner with a state-owned enterprise? How can you compete in technological innovation? How can you compete for talent? The key is getting to the right questions and learning how to think differently, Lim says.
"Participants in this program come away with new thinking on how their business practices and strategies need to change," says Lim. "Not only in Asia, but at home and around the world."
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