Developed vs Emerging Econmies

Question we are looking at

How a countrys institutional and factor

environment influence firms capabilities and
diversification strategies.

Developed Economies
Country resources are well developed and abundant Example : USA , UK
Enables firms to enjoy specialization benefits Continuously challenge each others
competitive advantage
Enhance their Marketing Capabilities R&D and marketing expertise
Barriers to Entry Patents , Consumer Loyalty

Low Levels of product diversification increases production efficiency and enables

economies of scope
These specialization benefits helps them to enjoy competitive
advantages in global arena as well.
Summary :
Product Diversification --- Negative Performance
International Diversification --- Positive Performance.

Emerging Economies

Country resources are crucial and relatively deficient Example: Indonesia, Russia,
Ukraine, Venezuela

Focus on non-marketing skills than marketing skills.

Product Diversification
Political Influence: Securing Monopoly status in certain markets Limiting
Competitive Entry without sharpening marketing skills
Example Gasprom (a caldron of secrecy, nepotism and political connections) ,
lobbying the Government to restrict FDI
Employee Training and Optimization
May not enjoy competitive advantage on global front Unable to replicate the non
marketing skills in Foreign countries due to localized strategies.

Summary :
Product Diversification --- Positive Performance
International Diversification --- Negative Performance.