Understanding the Complexity of Emerging Markets from a Multinational Company Perspective - A Case Study of the Nigerian Dairy Sector

Abstract: Reduced growth rates in saturated developed economies have put increasing pressure on multinational companies (MNCs) to expand to rapidly developing emerging markets and capitalize on their value potential. Yet, this value potential comes with several challenges which are very different from what firms experience in developed countries, especially with regards to the bottom of the pyramid. The Transnational Model, which is one of the most influential internationalization frameworks argues that firms should be locally responsive in order to reflect market specificities. This study shows that firms need to be more than responsive to capture the full value potential of emerging markets. Therefore, the authors of this study developed an external environment framework for analysing emerging markets, based on an embedded case study about Nigeria and its dairy industry. The empirical findings show that in contrast to existing emerging market analysis frameworks, external environment factors are not equally relevant at all levels. Key factors of a firm’s general environment can prevent and support advancement of an industry whereas each element of an emerging markets value network can be equally important as it requires a collective cooperative progress in order to increase the network’s value potential.