Summary of the New Frontiers

Topics: Developed country, Emerging markets, Developing country Pages: 3 (897 words) Published: January 24, 2013
ew Summary: The New Frontiers
The article “The new Frontiers” appeared in “The Harvard Business Review” in the summer edition (July – August) of 2009 and looks at the different economic shifts between the developed and developing countries which emerged as a consequence of the global economic downturn between 2007 and 2009. The author of the article Anand P. Raman is a senior editor at the magazine focused on the research of emerging market economies. The global economic development of the last decades has brought fundamental changes to markets around the world, altering the borders of the corporate world and forcing multinational companies to adapt to new market conditions. The author speaks about changes on three levels generated through the crisis: * First, a rapid growth of the market of developing countries next to shrinkage of those of the developed world. This trend becomes apparent in the World Economic Outlook of the IMF of October of 2012. While Brazil’s forecasted GDP for 2013 amounts to a growth of 4 percent, European countries such as Germany and France are only said to achieve 0.9 and 0.4 percent respectively, thus illustrating the consequences of the ongoing financial crisis in the euro area. * Second, government stimulated economic growth through modifications in monetary and fiscal policies. China for example implemented in 2009 a 50% sales tax-cut off on small and fuel-efficient cars. * Third, enhanced competition in the markets of emergent countries forces local and multinational companies to rethink many of their strategies. As a result large companies especially in emergent countries have worked on cost reductions plans through portfolio diversification and a stand-by policy concerning employee-hiring. Another result is the investment in innovation by climbing up and down their own value chain in order to target new consumer groups such as rural and lower middle class population in China and India. According to the author these...
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