Reconsidering of Emerging Market Strategy

The Utilization and the Horizontal Transfer Process of Home Country Advantages

Abstract

Studies of emerging market strategy have investigated the volume zone strategy for the middle class segment and the BOP business. This paper examines the Indian air conditioner market and analyzes the product lines of 13 companies and the utilization process of home base resources in one Japanese company. In the product line analysis, through statistically estimating the product quality on the hedonic approach, this paper reveals the extent to which products are placed on the range from high-end to low-end, and defines the strategy type of each company. First, the results showed that Japanese companies use a strategy focusing on high-end products rather than the volume zone strategy. This paper names this lineup the premium zone strategy for high quality demand. Second, it was found that the studied company horizontally transfers firm specific resources (core technologies) to India. Specifically, by selecting and combining core technologies in Japan, this company creates various products that are suitable for the Indian quality-oriented segment. Following from the results, this paper discusses the factors that specify the strategy type in emerging countries and reconsiders emerging market strategy.