What are your thoughts?
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The discussion basically says ..Yes emerging markets have enormous growth potential but the profits are not easy to make. I think that is case when a company enters any new market. Initially there will be challenges in developing their channels, and creating their brand in the market. This will surely drain their profits while the revenues may be high.
Let me give a reverse example of Tata Motors. Why did Tata acquire Jagaur, Land Rover (JLR) ? Even though they bought JLR from Ford at exactly the wrong time and paid a huge price for it, now they seem to be going well as JLR boosts Tata Motors profits.
While Tata's long term goal would be to drive volumes and eventually profits with Nano type cars in emerging markets (not only in India), they want to bank on established brands in developed markets for short term profits. Neat Strategy !
But you cannot miss the forest for the trees ! Think Long term, so emerging markets are hot and will remain hot!
Regards
Nagesh