Post on 05-Apr-2018
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Group 4
CHETNA | MADHUKAR | BHASKARPRASOON | SUDHISH | GESU | VARUN
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What is the result ofinnovation blowbackfrom emerging
economies?
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Emerging Economies reinventing business models &
systems of production & Distribution es ern s regar ng emerg ng econom es as
sources of economic growth & high quality brainpower
beyond upper class Opportunities & Threats
,economies coming back with frugal innovation
to it due to disruptive nature
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nations turning the
economies? What
from their success
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What is driving emerging market
innovation?
Emerging markets are far more varied and volatile than
mature ones ere s e money aroun
Cultural complexities are confounding and tastes are
People who are not used to brands move easily from
Heavy investment in education
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What is driving emerging market
innovation?
As companies work their way down the income pyramid,
distribution becomes tricky o ern re a c a ns accoun or on y a r o consumer
goods sold in China and a fifth in India
surprising innovations and even generate entirely newbusinesses
Companies in search of fortune at the bottom of the
pyramid have to start not with consumers but with non-consumers
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Re lacin scalin u b scalin out
Decentralization
Outsourcing e u mo e
Designed to help companies mobilise resources when theneed arises
Flexibility increases Application of mass-production techniques to sophisticated
services Disruptive/Frugal Innovation
Redesigning both products and processes from scratch to
Value-for-money strategies for recessionary times
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Constraint-based innovation or reverse innovation
Different from fiddling with existing products Taking the needs of poor consumers as a starting point
and working backwards
nstea o a ng more e s an w st es, t ey str p t eproducts down to their bare essentials
Hand-held electrocardiogram (ECG) called the Mac
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Frugal innovation is not just about redesigning products
business models
more customers, and accept thin profit margins to gainvolume
Apart from being cost efficient, frugal products need tobe tough and easy to use
Nokia handsets
flashlights (because of frequent power cuts) multiple phone books (because they often have
several different users)
menus in several different languages
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Frugal does not mean second-rate
technology
materials and their impact on the environment
1. Contract out more work - Bharti Airtel
.
TCS is looking at using mobile phones to connect
television sets to the internet3. To apply mass-production techniques in new and
unex ected areas such as health care
Dr. Devi Shetty - Narayana Hrudayalaya Hospital
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Jugaad Making do with what you have & never giving
Chinese have made two distinctive contributions to frugalinnovation
Use of flexible networkspowered by guanxior personalconnectionsto reduce costs and increase flexibility
Bandit or Guerrilla innovation, known as shanzhai
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highly diversified conglomerates
Inabilit of ca ital markets
Talent shortages
Brand buildin
Many emerging countries also rely heavily on state-owned enterprises
Local entrepreneurs can use them to seize business
opportunities Multinationals can use them to gain access to difficult
markets
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Disruptive Innovation Why will it
Markets for cor orate control are much more li uid
be quicker than in the past?
Emerging economy companies keen on M&A
China in 2007
30 billion $ outbound deals (60 % more thanrevious ear
5 billion $ inbound deal more than previousyear
India in 2007
35 billion $ outbound deals (5 times more thanprevious year)
10 billion $ inbound deal more than previousyear
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Disruptive Innovation Why will it
be quicker than in the past?
eer s ze o t e emerg ng mar ets
Japanese expert in few engines i.e. cars & electronics But emerging-market export machine has engines in
almost every industry
.g rce or a , n osys an , a er e c
Producing world class products & processes
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Disruptive Innovation Why will it
Em hasis on volume
be quicker than in the past?
Emerging-market companies are obsessed by finding
new markets to make u for their slim rofit mar ins Mobile-phone companies have been adding 8m-
10m new subscribers a month
Wests best companies have grasped the potential ofemerging markets
West is ripe for frugal innovation.
Western consumers and governments have been ona debt-fuelled spending spree for many years
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Heads Tails
.
Customers have always been put first and the
objective has been to cut costs.
counts as innovation.Extending Henry Fords Innovation to heart &
eye surgery Very Innovative.
No such thing as single emerging market, letalone emerging market paradigm - India inservices China in manufacturin Russia and
Similar Challenges Large number of peoplebelow poverty line . Similar opportunities- Rapideconomic rowth. Joint venture - Mahindra
Brazil in energy & commodities working with Chinese companies, Huawei hasopened research center in Bangalore, GE sellsits electrocardiograms as successfully in China
.
Overselling Emerging Markets - India ranked
133rd out of 183 for ease of doin business.
India & China investing heavily in business
schools ISB 16 , Hon Kon Universit ofScience and Technologies (14) Emergingmarkets firms are leapfrogging there Westerncounterparts such as Mobile money in Kenya,
Shift in interest towards emerging nations forleading business gurus like CK Prahalad
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What are the emergingMNCs from theseeconomies?
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Accounts for 6% of Indias GDP
u s ar es n automo es, osp ta ty, te ecom & ot ers
Uses Capital from established businesses to supportgrow n new ones
Uses resources to attract & train the best people
ses ran name o se a n s o pro uc s
Brand is estimated to be worth about 100 billion rupees
otors
Worlds Cheapest Car, $2,200 TATA Nano
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Tata Consultancy Services
Innovation for Indias most pressing problem Drinking Water
Uses Rice Husks n a nves men o recurr ng expense o every ew mon s
Already developing new & improved version for future
Produced 1m, hopes to sell 100m in the future
Fortune At the Bottom Of the Pyramid Installed sensors in rural areas to gather local soil & weather conditions
Farmers call help lines on their mobile phones & receive advice on bestproducts to use which creates a market
Box that connects television to the Internet through a mobile phone
Elegant & Frugal idea can connect millions of people to the Internet Bought Citigroup Global Services
Outsourcing Division of Citibank
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HCL
Reliance Industries .
Bharti Airtel
Ac uirin Zain for $9 billion
Charges Lowest Fees in the industry Outsourced all its work to Ericsson & IBM
Made companies rethink their business models
Hindalco se success on o we p anne acqu s ons
Revenues grown from $500 mn to $15 bn in seven years
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In 1990, unknown producer in Indonesia
,
ITC
One of the bi est Indian con lomerates
Internet Kiosks called E-Choupals help farmers manage demand& supply efficiently
uture roup
Innovation through organised chaos in its stores
o re oyce anu ac ur ng
Developed $70 fridge that runs on batteries
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Retail Stores that offered line of credit to customers
,
One of the countrys biggest network of banks & retail stores
Dachan ian China
Motorcycle maker works with 100s of part suppliers Li & Fung (Hong Kong)
Works closely with 12,000 companies in more than 40 countries
Puts together customised supply chains & ensures quality& on-
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Extremely good at market segmentation
SAB Miller (South Africa)
Prior to 1990 was a local South African brewer, now the worlds
2nd
largest Lenovo (China)
Did not exist in 1990
Bought IBMs PC business & is now worlds fourth largest PC
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Thank You!
Questions?