Surf Industry and Emerging Markets

Topics: Economics, Developing country, Investment Pages: 11 (3712 words) Published: June 1, 2012
Table of Contents
Emerging Markets2
State of the Surf Industry4
Barriers to Entry6
Drivers of Surf Economy8
Development of Surf Industry in Emerging Market8
Case Analysis: Sri Lanka10
Drivers of Surf Industry Development12
Social Cultural Impacts and at-risk youth13

This paper will explore the concept of emerging markets, and the profit potential of multinational enterprises when entering these developing economies. In particular the potential for the surf industry to exploit new niches in these countries, tailoring their product to low-income per capita demographics. Integrating the surf industry and tourism into these markets while cultivating the economies and infrastructure of appropriate regions will enforce goodwill. This paper will also discuss the tangent premise that developing a surf industry in these markets will positively affect at-risk youth. Thesis: Developing the surf industry in emerging markets will foster economic prosperity, build long-term brand rapport and service at-risk youth. Emerging Markets

Emerging Market Economies (EMEs) are typified by considerable currency and political risk, market inefficiencies, capital flow restrictions, information barriers, and low to middle per capita income when compared with more industrialized nations (Errunza). However EME’s are considered to be fast-growing economies, typified by low to middle per capita income. EME’s are characterized as transitional, meaning they are in the process of instituting economic reforms that will allow them to move from a closed-economy to an open market economy. These markets are developing new infrastructure that can service economic growth and support employment, and “emerge” on the global economic scene. The new reforms and policies of EME’s are meant to establish accountability, transparency, and efficiency in capital markets; lowering systematic macroeconomic risks to domestic and foreign investors (investopedia). The “bottom of the pyramid” is a term referring to the largest, yet poorest socio-economic class, 2.5 billion people living on less than $2.50 a day. In these same markets, where the “bottom of the pyramid” live investors and financial institutions have a great opportunity. Through support in the development of these future viable economies companies can claim goodwill and rapport by building these economies and enrich investors with eventual long term growth in these sectors. C.K. Prahalad concurs, “the corporate sustainability and inclusive growth of poor people in the global marketplace will become inextricably linked.” The economic reforms and infrastructure development of EME’s facilitate Foreign Direct Investment into these countries. With Foreign Direct Investment (FDI) to these countries, multi-national enterprises (MNEs) are seeking to access these new markets. MNEs must focus on developing the low-income emerging market with productive customers as well as products tailored to these demographics. While companies may seek to implement a standardized product in EME’s, Mahesh Chandra decrees that “parent companies should act as venture capitalists, investing in companies that are growing, preserving the autonomy and lower cost structures of the domestic company, and transferring product ideas from on country to another.” The single biggest constraint involved in serving developing economies is affordability and price. When developing products and services for these economies, foreign companies must consider the value-added POV of these customers, then adopt local branding, marketing and organizational strategies (Mahesh). However, investors must assume that these consumers desire a better life and will purchase a product that satisfy their wants, and these “low-income sectors should not be thought of as a downgraded version of mainstream markets (Lettelier).” These...
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