Market Intelligence and Emerging Markets

In a recent MIT Sloan Management Review article entitled, Mastering the Market Intelligence Challenge, many key points are made about the importance of multinational corporations using market intelligence when investing in emerging markets. Even though the article, which is authored by Murali D.R. Chari, Kimberlee Luce, and Inder Thukral, does not focus solely on supply market intelligence, there are several takeaways for procurement and supply chain professionals who engage in market intelligence research. Here are highlights of special interest:

In emerging markets, when identifying potential partners (supplier discovery), company lists or databases are nonexistent or not comprehensive. “For example, in the case of distributors, names of potential partners often have to be gathered by going to the point of sale and checking product labels to see who has distributed them, reviewing customs data to identify importers and distributors, and broadening one’s perspective and considering other manufacturers who supply to the same point of sale or even competitors as possible contenders.”

In terms of negotiating with partners, “it may be difficult to uncover and understand the economics of their businesses to identify where and on what terms one is most likely able to gain concessions. For instance, in the case of contract manufacturers, one may be able to gather some data from the manufacturers themselves via a set of preliminary discussions, but this will need to be triangulated with audited financials or other contract manufacturers.” An example of this is in India where “travel by bus to the local tax authority” to “seek permission to review companies’ financial statements and tax filings” is sometimes required.

A variety of resources and processes, other than primary sources, should be used to monitor changes in emerging markets. Relying solely on primary sources leads to three serious problems as identified by the authors:

  • market intelligence, through the way it is haphazardly obtained, stays sequestered within divisions and departments
  • market intelligence can be inaccurate and “reflects the perspective of the external source”
  • lack of “systematic attention” leads to data that is not current
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