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Winning in emerging markets: A road map for

strategy and execution

Article January 2010


216 1,274

2 authors, including:

Krishna G. Palepu
Harvard University


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A Road Map for Strategy and Execution

By Tarun Khanna and Krishna G. Palepu

ISBN 978-1-4221-6695-6
US$35.00 Hardcover

From the Preface:

The research journey for this book began fifteen years ago when we were teaching in a Harvard
Business School Executive Program, Managing Global Opportunities in China and India. The
program targeted Western multinationals and investors interested in business opportunities in
the then rapidly growing Chinese market and the newly liberalizing Indian market. In Mumbai,
as part of that executive program, we invited Ratan Tata, chairman of Tata Sons Limited, to
share with the group Tatas strategy for the new Indian market. We were surprised to see
Western executives reaction to Tatas ambitious plans for exploiting the new ambient
opportunities. Their experience in Western markets had convinced these executives that
emerging market business groups like the Tatas, consisting of several dozen companies in
disparate, seemingly unrelated businesses, were anachronisms, doomed to go the way of the
dinosaurs unless they radically restructured and focused on one or two core businesses. The
disconnect between how emerging market senior leaders like Ratan Tata and leaders of Western
multinationals in our executive program thought about the strategic implication of emerging
market opportunities was truly fascinating to us.

The crux of this book is to advance a structural framework for thinking about the nature and
extent of differences between emerging markets and mature markets on the one hand, and
among emerging markets on the other. That is, the so-called BRIC economiesBrazil, Russia,
India, and Chinadiffer from the United States, the United Kingdom, and Japan on the one
hand, but they also differ from each other quite extensively. We specify how. In particular, we
articulate a framework to calibrate the differences in soft and hard institutional infrastructure
we refer to the absence in emerging markets of things we take for granted in our backyard in
Boston as institutional voidsthat permeate emerging markets, and then offer solutions for
dealing with these.

Tarun Khanna is the Jorge Paulo Lemann Professor at Harvard Business School and the
author of Billions of Entrepreneurs: How China and India Are Reshaping Their Future and Yours
(Harvard Business School Press, 2008).

Krishna G. Palepu is the Ross Graham Walker Professor of Business Administration and
Senior Associate Dean for International Development at Harvard Business School.

For more information about the book or for purchasing inquiries,

please contact Erin Brown at Harvard Business Review Press: ebrown@hbr.org
Praise for Winning in Emerging Markets:

The scope of this books research is broad and deep, the authors thinking is deliberate and well tested, and the
result is a compelling must-read for any leader who is seeking sustainable growth in dynamic emerging
Muhtar Kent, Chairman and CEO, The Coca-Cola Company

Learning to compete in emerging markets is one of the greatest challenges facing global businesses today. In
this book, Tarun Khanna and Krishna Palepu show leaders how to navigate the different operating conditions
in these markets and how to take advantage of the tremendous growth opportunities they offer in the twenty-
first century.
Dominic Barton, Worldwide Managing Director, McKinsey & Company

Emerging markets have piqued the interest of many business scholars. Much has been written about them, but
this book is unique in that it proposes an actionable framework for assessing the challenges and opportunities
associated with the institutional voids in such markets.
N. R. Narayana Murthy, founder and Chairman, Infosys

Where others have failed, Khanna and Palepu have succeeded in providing an elegant framework for
executives to identify and benefit from the unique attributes and vast opportunities of the emerging markets
their expert ability to provide structure to so many unstructured issues makes this a compelling read for any
executive seeking to operate on a global basis and capitalize upon the almost limitless potential in the emerging
markets in the twenty-first century.
Steven Denning, Chairman, General Atlantic

Treating emerging markets as nothing but underdeveloped economies ignores the innovation and
opportunities within these markets. This book will enhance the understanding of emerging markets and their
Phumzile Mlambo-Ngcuka, former Deputy President, South Africa

Khanna and Palepu lucidly explain the roles that entrepreneurs and the government can play in helping
countries emerge and contribute to regional and world well-being. Filled with real-life examples with which
the authors have personal experience, this is a valuable read for leaders of all persuasions and geographies.
Sleyman Demirel, former President of Turkey

In this important book, Khanna and Palepu suggest a fundamentally new approach to strategy in emerging
markets; they first define the structure of these markets and then break new ground by suggesting ways to
exploit the institutional voids in that structure. This is a powerful approach for practitioners.
Victor Fung, Chairman, Li & Fung

Khanna and Palepus groundbreaking work on what differentiates emerging markets gives businesses a new
way to look at opportunities and risks. Their book is a must-read for executives and board directors whose
enterprises operate in Latin America and other dynamic regions, as well as the policymakers working with
these leaders.
Luis Alberto Moreno, President, Inter-American Development Bank

Khanna and Palepu offer toolkits to explain how entrepreneurs in emerging markets can not only catch up
with the developed world, but also learn from each otherfrom Chile to China, India to Indonesiaand
contribute to a new world order.
Andrnico Luksic Craig, Director and Vice-Chairman of the Board of Directors, Banco de Chile, and Vice-
Chairman, Quinenco

I am often asked about doing business in emerging markets such as China and Vietnam. My recommendation
for practitioners would be to read this bookso that they can easily understand the basic structural issues
involved in formulating strategies for these markets.
Margie Yang, Chairman and CEO, The Esquel Group
Session Module Reading Case Description Videos Country
Introduction: The Chapters 1,2,3 Vizio, Inc. (110024) Creation of a de novo business model in Worldwide
Idea of an Emerging consumer electronics to challenge
Market incumbents from a developed country, and
expanding into emerging markets. How
feasible would this strategy have been
originating from an emerging market?

Metro Cash & Carry Characterize institutional voids in the Metro Cash & Carry, Video (707812) India
(707505) fastest growing retail sector in the world,
and trace its implications for a developed
world incumbent corporation.

Emerging Nokia? What is the dividing line between Worldwide
(710429) emerging and emerged markets? What
happens when conventional wisdom
regarding emerging markets are overturned
(e.g much innovation in mobile telephony
comes from the poorer parts of the world)?
Also transition case to multinationals

Multinationals from Chapter 4 Metro Cash & Carry Introductory case for multinational China
the Developed (707505) module. How far, and how, should a
World European multinational adapt to the
peculiarities of the fast-growing Chinese

Monsanto: Realizing How can a multinational work with local Brazil
Biotech Value in Brazil companies and the state to get
(507018) compensated for the intangible assets
(intellectual property, brand) that it brings
to bear in the service of society?

Tetra Pak Argentina What should multinationals do in the face Argentina
(708402) of endemic uncertainty and financial
volatility in emerging markets? When is
deeper commitment advised? When is
volatility a deterrent?
Session Module Reading Case Description Videos Country
Genzymes CSR To sell treatment for rare diseases, how Genzymes CSR Dilemma: How to Play Its India, Brazil
Dilemma: How to Play much should Genzyme compensate for Hand, Video (910801)
its HAND (910407) limited functionality of the state, and
limited spread and maturity of civil

Sex, Drugs, and Rock n How universal is the demand for music Worldwide
Roll: The MTV among the worlds youth, and to what
Approach to Tackling extent can consistent social messaging be
HIV/AIDS (709429) used to help a multinational expand into
emerging markets in Africa, Brazil, India,
China and elsewhere.

Microsoft in China and Long run evolution of their strategy Ravi Venkatesan, Chairman, Microsoft India China, India
India, 1993-2007 towards the next billion with a focus on Video (708804)
(708444) China and India. Cataloguing of missteps
by a generally well run company and
attempted restart of business model.

GE Healthcare, 2006 Traces over a decade of a shifting business Joe Hogan, President & CEO, GE Healthcare, Worldwide
(706478) model for the most technically-cutting Video (708801)
edge company in the GE portfolio.

Emerging Giants Chapter 5 Haier: Taking a Chinese Taking a Chinese company global. Michael Jemal, CEO, Haier America, Video China
from Fast-Growing Company Global Introductory case for emerging giants (DVD) (707801)
Emerging Markets (706401) modules. How can an indigenous
entrepreneur adapt to the economic and
political realities of China? Thereafter,
how should it expand its footprint

Dogus Group: Weighing When is there likely to be competition Dogus Group: Weighing Partners for Garanti Turkey
Partners for Garanti Bank versus cooperation between indigenous Bank (Video) DVD (709807)
(709401) entrepreneurs and foreign corporations.
What is the best way to structure potential

HCL Technologies (A) Emerging markets are characterized by India
(Abridged) (408004) large pools of skilled and semi-skilled
talent. What are innovative ways of
tapping into this talent pool? First of three
cases catering to large populations.
Session Module Reading Case Description Videos Country
Narayana Hrudayalaya Healthcare for the Masses. How can local Video from Youtube: India
Heart Hospital: Cardiac entrepreneurs provide for the most basic http://www.youtube.com/watch?v=is44fqWInsM
Care for the Poor needs of society, an application to tertiary
(505078) health care? Second of three cases catering
to large populations.

Banco Compartamos: Financial inclusion for the masses, one of Mexico
Life after the IPO the first for-profit microfinance firms to go
(308094) public. Third of three cases catering to
large populations.

Globe Telecom Family business groups are often de facto Philippines
(704505) venture capitalists, launching new
businesses in the absence of widespread
availability of risk capital. What is the
right way to structure such investments?

Blue River Capital Private equity players experience India
(708448) challenges getting started in emerging
markets. How can professional private
equity compare and contrast with family
run private equity.

Tata Nano, The Peoples Innovation through fundamentally India
Car (710420) rethinking an everyday product, the simple
car. Also transition case to next module.

Globalization of Chapter 6 House of Tata: Acquiring Transformation of a dominant business Worldwide
Emerging Giants a Global Footprint group in India into a dominant player
Module (708446) worldwide, tracing the structural changes it
must go through to expand worldwide.

Crossing Borders: Regionalization, across Africa, as a Zain (MTC) Pre-Class (Video), DVD (709803) Africa, Middle
MTCs Journey through potential intermediate step toward Zain (MTC) Post-Class, (Video) DVD(709805) East
Africa (708477) globalization. How can the interests of
diverse entities in diverse African countries
be integrated into a whole.
Session Module Reading Case Description Videos Country
Teva Pharmaceutical Leveraging intellectual assets of an Teva Pharmaceutical Industries, Ltd., Video Israel
Industries, Ltd. (707441) emerging market to gain entry into the (708806)
developed world, and subsequently moving
up the intellectual value chain.

Samsung Electronics Co.: How did a manufacturing powerhouse in a Korea
Global Marketing commodity industry (memory chips) build
Operations (504051) one of the worlds most recognized

Gazprom (A): Energy Energy and strategy in Russian history. Russia
and Strategy in Russian How successful is the states ability to use
History (709008) its political muscle to create a global
energy giant from Russia?

Vale: Global Expansion As one of Brazils flagship corporations, Brazil
in the Challenging World and one of the worlds most powerful
of Mining (710054) mining groups, goes global, how will it
reconcile the tensions with its country of

Course Summary Chapter 7 Review of implications of institutional
voids framework for multinationals,
emerging giants and investors.
TARUN KHANNA is the Jorge Paulo Lemann Professor at the Harvard Business School, where he
has studied and worked with multinational and indigenous companies and investors in emerging
markets worldwide. He joined the faculty in 1993, after obtaining an engineering degree from
Princeton University (1988) and a Ph.D. from Harvard (1993), and an interim stint on Wall Street.
During this time, he has served as the head of several courses on strategy, corporate governance,
and international business targeted to MBA students and senior executives at Harvard. He currently
teaches in Harvards executive education programs and is Faculty Chair for HBS activities in India.

His book, Billions of Entrepreneurs: How China and India are Reshaping Their Futures and Yours,
was published in February 2008 by Harvard Business Press (Penguin in South Asia), and has been
translated into several languages. It focuses on the drivers of entrepreneurship in China and India
and builds on over a decade of work with companies, investors and non-profits in developing
countries worldwide.

A forthcoming co-authored book, Winning in Emerging Markets: A Roadmap for Strategy and
Execution, will be published by Harvard Business Press in March 2010.

His scholarly work has been published in a range of economics and management journals, several of
which he also serves in an editorial capacity. Articles in the Harvard Business Review (e.g. China +
India: The Power of Two, 2007; Emerging Giants: Building World Class Companies in Emerging
Markets, 2006) and Foreign Policy (e.g. Can India Overtake China?, 2003) distil the implications of
this research for practicing managers. His work is frequently featured in global newsmagazines as
well as on TV and radio.

Outside HBS, he serves on the boards of the global power company, AES Corporation, and Indias
largest microfinance firm, SKS Microfinance, along with several others in the financial services,
energy, automotive, and life sciences sectors, and actively invests in and mentors startups in Asia.
He also serves on the advisory boards of Parliamentary Research Services, an NGO dedicated to
providing non-partisan research input to Indias Members of Parliament to enhance the quality of
democratic discourse and that of Primary Source, a Boston-based NGO dedicated to helping US
schools, from K-12 grades, adopt curricular material reflecting global societies.

In 2007, he was nominated to be a Young Global Leader (under 40) by the World Economic Forum.
In 2009, he was elected a Fellow of the Academy of International Business.

He lives in Newton, MA, with his wife, daughter and son.

KRISHNA G. PALEPU is the Ross Graham Walker Professor of Business Administration and Senior
Associate Dean for International Development, at the Harvard Business School. Prior to assuming
his current administrative position, Professor Palepu held other positions at the School, including
Senior Associate Dean, Director of Research, and Chair, Accounting and Control Unit.

Professor Palepus current research and teaching activities focus on strategy and governance.
Professor Palepu has published numerous academic and practitioner-oriented articles and case
studies on these issues.

In the area of strategy, his recent focus has been on the globalization of emerging markets,
particularly India and China, and the resulting opportunities and challenges for western investors
and multinationals, and for local companies with global aspirations. He is a coauthor of the book on
this topic, Winning in Emerging Markets: A Road Map for Strategy and Execution. He developed
and taught a second year MBA course, Globalization of Emerging Markets, which focuses on these
issues. In addition, Professor Palepu Chairs the HBS executive education programs Global CEOs
Program for China.

In the area of corporate governance, Professor Palepus work focuses board engagement with
strategy. Professor Palepu teaches in several HBS executive education programs aimed at members
of corporate boards: Making Corporate Boards More Effective, Audit Committees in a New Era
of Governance, and Compensation Committees: New Challenges, New Solutions.

In his pior work, Professor Palepu worked on mergers and acquisitions and corporate disclosure.
Based on this work, he coauthored the book, Business Analysis and Valuation: Text and Cases,
which won the American Accounting Associations Wildman Award for its impact on management
practice, as well as the Notable Contribution to the Accounting Literature Award for its impact on
academic research. This book, translated into Chinese, Japanese, and Spanish, is widely used in
leading MBA programs all over the world. It is accompanied by a business analysis and valuation
software model published by the Harvard Business School Publishing Company.

Professor Palepu has served on a number of public company and non-profit Boards. He has also
been on the Editorial Boards of leading academic journals, and has served as a consultant to a wide
variety of businesses.

Professor Palepu has a doctorate in management from the Massachusetts Institute of Technology,
and an Honorary Doctorate from the Helsinki School of Economics and Business Administration.

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