Presentation given by Bertrand VIALA at NIHA Ankara to Undergrad students of Bilkent University What does the Reverse Innovation theory tell us about business entry strategies in emerging markets

2. INNOVATION AND EMERGING MARKETS

4. GROWTH, INNOVATION AND EMERGING MARKETS

5. EMERGING MARKETS : A CHANGING PARADIGM

6. THE LINK BETWEEN INNOVATION AND EMERGING MARKETS

7. HOW TO OPERATE ?

10. Institut d EtudesPolitiquesAix-en-Provence, MA, France- 1998

11. UniversitaetKonstanz, Politikwissenschaft, ECT, Germany, 1996· Fluent in Turkish, German, English Senior Business Development Specialist Managing Partner EFRAN INTERNATIONAL CONSULTING

12. We are located in Ankara We also have a network of permanent world class EFRAN CONSULTING correspondents that work in business development projects on a regional base in: · New Dehli – India · Abidjan – Ivory Coast, · Rabat – Morocco · Baku – Azerbaidjan A project extending: ·Turkmenistan ·Mongolia· Ethiopia ·Tunisia · Malaysia

13. OURJOB BusinessDiplomacy Economic/competitiveIntelligence Market PenetrationProject GROWTH MarketingStrategies

14. Whatdoes ‘growth’ meanfor a company? Whatwould be a ‘growthcompany’?

15. Any firmwhosebusinessgeneratessignificantpositivecashflowsorearnings, whichincrease at significantlyfasterratesthantheoveralleconomy. A growthcompanytendstohaveveryprofitablereinvestmentopportunitiesforitsownretainedearnings. Thus, it typicallypayslittleto no dividendstostockholders, optinginsteadtoplowmostorall of itsprofitsbackintoitsexpandingbusiness. Investopedia (ForbesCompany) IDEAL – Exple : GOOGLE

16. GROWTH New Customers New / UpdatedProducts R&D Marketing EmergingMarkets Innovation

17. THE SECOND WORLD ParagKhanna

18. EMERGING MARKETS : A CHANGING PARADIGM TYPICAL FORM OF INTERNATIONAL TRADE STRUCTURE IN 20th Century DevelopedMarkets Spinoffproducts NaturalandAgriculturalResources Non- Solvability No MiddleClass FinancialpowerTechnology Intrazonetrade EMERGING MARKETS NaturalandAgroResources 3rd WorldMarkets

19. TheRiseof EmergingMarkets Maincharacteristics Competition at homeandforeignmarkets Ownindustrialcapacity A lot of needsto be dealtwith Changingbalance of power Majordisruption Goinguptheladder of conceptionanddesign of products Morecompetitive Capacitytoinfluenceandgenerateinnovationprocesses Expandingmiddleclasswithincreasingpurchasingpower Moreadaptedtonewtypes of customers

20. INNOVATION SEARCHING FOR DISRUPTION

21. Innovation MainConcepts What is innovationabout? Revolutionary DisruptiveInnovation (Christensen) ‘Seizethewhitespacebeyond’ (Mark W. Johnson) R&D investment Evolutionary New Marketing Strategies New business model ‘CrossingtheChasm’ (Geoffrey A. Moore’s) What is theprocess at work? Market anddiffuseyourinnovation Growth ROI

22. TheReverseInnovation Model – Jeffrey R. Immelt, VijayGovindarajan, ChrisTrimble Heavyinfrastructure Originalproduct POOR SALES Highcost Readapttothe market Design a lowcost – moreuserfriendly – lighterdevices New product NEW MARKET OPPORTUNITY EMERGING MARKET MATURE MARKET PROSCONS Doesntreflecttotallytheevolvingsituation of marketsthemselves - whendoes a market stop to be emerging? . Link betweenemergingmarketsandinnovation Localadaptationcostsandrisks – IP rights, heavyregulations, Example: GOOGLE in China Providesinsightabouthowtomaximize market penetration Doesntdetailthecost of reintroducingyourproduct in themature market – especiallyadaptationtoqualitystandards.

23. HOW TO OPERATE? Differentthantrading MORE COMPLEX THAN DELOCALIZATION Backtohome market LocalMarketing ImplementationPhase Project Designphase SPECS Salesand marketing teamslocallymanaged Findinglocal/foreignpartnersforproductionand marketing Readaptation of marketing Internal R&D team MarketingStrategies Qualitycontrolandstandards Analysisandresearch on target market Local R&D team Costs can be reducedbytheuse of Web2.0 applications + Ecommerce + Utrade Set upmanagementteaminternally Competitiveintelligence BusinessDiplomacy

24. CONCLUSIONS BUT LET’S BE PRAGMATIC DEVELOPMENT OF NEW FORMS OF MARKETING MAKE THESE OPPORTUNITIES OPERATIONAL INNOVATION IS STILL A LEADING FORCE IN MATURE MARKETS EMERGING MARKETS ARE THE WORLDS GROWTH POTENTIAL INTERACTION WITH EMERGING MARKET HAVE STRONG RISKS AND COSTS – ESPECIALLY FOR SMES Howeverenthusiatic an idea extensiveresearchandrisk assessmentis a priority ACCESS TO NEW MARKETS IS A STRONG INCENTIVE FOR INNOVATION

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