Challenges Of Reliable Information In Emerging Markets Like Indonesia

Pitfall: Availability of valid secondary information

Discuss about the Challenges Of Reliable Information.

In the modern era of globalization, expansion and acquisition has become an important aspect of any organization. This is because, the completion in the business environment is extremely intense and the company needs to see to it that it is able to abide by the competition for its survival. This is the reason why various companies, often look out for opportunities to invest in the emerging markets (Van den Nieuwboer, Van de Burgwal & Claassen, 2016). The chosen emerging market for the report is Indonesia. Emerging markets have a huge potential to become the future economies and this makes them even more attractive to various international firms.  However, expansion requires relevant reliable market information to access the feasibility for the expansion and for this reason various companies carry out research into the given countries (West, Ford & Ibrahim, 2015).  The given report will be analyzing three pitfalls which exist while researching reliable market information in the emerging economies like that of Indonesia.

Very often when a business wants to invest into an emerging country, they need to have access to the past business data available in the country. This provides them with an exposure to the past trend analysis and the performance of the country with reference to a particular industry (Sarstedt & Mooi, 2014).  The companies before entering a market, often like to conduct various strategic management tools and analysis like the PESTLE Analysis, SWOT Analysis, and BCG Matrix Analysis and related in order to figure out the feasibility of the expansion and the profitability that can be expected out of them (Hadiz & Robison, 2013). In an emerging country like Indonesia, there exists various opportunities for growth. The reason behind this is that the income level of the people has been increasing at a consistent rate and the economy has been flourishing. However, there exists lack of relevant data available on various subjects like the:

• Growth of attractive industries in the past
• Accurate rise in the Income level and Population growth
• Detailed Taxation breakdown and analysis

These decision making criteria’s count for the most relevant aspects of an international business. Hence, if a company planning to invest in Indonesia has no accurate access to the information, they will not be able to make sound decisions (McGivern, 2013). This may lead to incorrect decisions being made on the side of the company and create huge losses for them.

Secondly, in certain local libraries there exist certain information available; however, this information is often inaccessible (Hair Jr & Lukas, 2014).  They are not easily available on the online open library platforms, which cause difficulties in utilizing them.

Poor infrastructure

Therefore, as stated earlier if there is lack of information in these arenas, a business will not be able to conduct a strategic analysis and might not enter the country from the failure of fear which then might pose a threat on the Indonesian economy as well.

These following suggestions have been proposed to overcome this barrier:

• Hiring local teams- As the information available in the local countries are restricted and inaccessible; this makes it difficult to find them on the online open libraries. For this reason, the company interested in investing in Indonesia, might hire local researchers and scholars to carry out a study. These researchers and scholars can be hired because they have an acute knowledge and information about the local economic and feasibility conditions (McQuarrie, 2015). 
• Visiting the country – In order to verify the information that will be presented by the local team of researchers and scholars, a separate department can be formed by the company, who would then visit the country for a period of 2-4 weeks and verify this collected information.

If they above given methods are applied then, the company would find it easier to overcome the risk.

Although Indonesia and other emerging and developing countries are often considered to be the most attractive markets to explore and to invest in, the investors often forget that these countries are still on their initial phase towards economic development and that it is necessary for the firms investing to understand that the infrastructure is yet not well developed (Webpages.uidaho.edu., 2018). 

The infrastructure forms the basis for any organizational research perspective. For the research to be conducted about the given country and to figure out any relevant factors that have a huge impact on the performance of the business, the access to communication facilities such as internet, tele communications, computers, fax and postal services. On top of that the availability of adequate electricity is one of the major requisites of carrying out effective research in the given country.

For the given barriers, obtaining the reliable market information about the given markets becomes increasingly difficult.  This is because the country lacks relevant resources required for an effective market research. Details about the factories that need to be developed and the area where the business will be operating can also be analyzed (Armstrong et al., 2015). However as many areas if Indonesia another EDME countries do not even have access to proper infrastructure or electricity, obtaining relevant market information can become increasingly difficult for the business organization.

For instance, if a business has to develop information about the property rates in Indonesia, then it will not be able to do so due to lack of information on the internet available due to restricted infrastructure. Therefore, infrastructure is believed to be one of the most relevant criteria’s in a business market research. To improve in this dimension, the business organization can do the following:

It can get into a contractual relationship with a local research and development team present in various universities in these countries. The students often need to make a thesis report before they can get their degrees and for this reason they can be collaborated with and they will help the firm in developing a structured process with the help of which they can overcome the barrier. These scholars can be provided with adequate information and facilities from the firm`s side which will help them in their research.

Research cost variations

Market research information in the emerging and developing countries often becomes a costly affair for the firm. This means that when the company aims to obtain relevant reliable market information with respect to consumer market and most used products or related information then, they have to invest huge costs (West & Bogers, 2014). This is because; the government of these countries often restricts the users to obtain access to this secret information. The government often demands high sums of money to have an access. Hence, it often becomes increasingly difficult for a firm, to obtain relevant data in this aspect or to break through the bureaucratic government hierarchy to obtain this information.

Furthermore, there exists issues such as corruption and agent problems in the given countries which would then lead further cost escalation on the firm`s side.

As these countries have huge urban and rural disparity, the rural areas situated near the cities are accessible easily, however those located far away from the urban areas will be difficult to access. Huge logistics costs will be involved in the given process which would then lead to problems for the firm. The firms generally looking out for international expansions have a well defined budget, and they need to function just on a basis of the given budget. These distances between the different parts of the country and lack of a systematic transportation medium may cause problems for the company and be an expensive affair (Burns, Bush & Sinha, 2014). Therefore, due to the high costs of research and the related obstacles involved various companies give away the idea of conducting marketing research with respect to the given countries.

The ways in which these causes can be overcome has been provided below:

1. Researching upon the previous work conducted- Very often certain scholars research upon information as to the related reliable market information that the company needs access to, therefore, instead of conducting the expensive marketing analysis available, the company can engage in the secondary analysis of this kind of information which would go a long way to help the firm to overcome all its barriers related to costs and to see to it that the market information is also obtained.
2. Taking reference from similar countries to that of Indonesia- If relevant information related to Indonesia is not available for the market opportunities, then the firm can conduct a research on the companies whose economy is similar to that of the Indonesian economy and take calculated risks thereby assuming that, the various components of their economy shall match with that of Indonesia (Malhotra, Birks & Wills, 2013). 
3. Hiring specialists- The Company may also hire specialists who would help them in conducting the research in exchange for internship opportunities in the firm or for some related fees.

Conclusion

Therefore, from the given analysis it can be stated that although the emerging and developing economies like Indonesia have a huge amount of potential to become the future advanced economies, however, the multinational companies cannot adequately conduct a market research before entering the country due to various barriers and obstacles related to availability of information. Certain pitfalls that the companies face refer to lack of reliable market information due to  High cost variations, Lack of proper infrastructure and availability and accessibility to secondary information. The report has discussed various pitfalls and how the unavailability of the information to the firms might divert them from entering the market. Furthermore, the suggested ways to mitigate the pitfalls have also been provided.

References

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015). Marketing: an introduction. Pearson Education.

Burns, A. C., Bush, R. F., & Sinha, N. (2014). Marketing research (Vol. 7). Boston, MA, USA: Pearson.

Hadiz, V. R., & Robison, R. (2013). The political economy of oligarchy and the reorganization of power in Indonesia. Indonesia, 96(1), 35-57.

Hair Jr, J. F., & Lukas, B. (2014). Marketing research (Vol. 2). McGraw-Hill Education Australia.

Malhotra, N. K., Birks, D. F., & Wills, P. (2013). Essentials of marketing research. Pearson.

McGivern, Y. (2013). The practice of market research: an introduction. Pearson Higher Ed.

McQuarrie, E. F. (2015). The market research toolbox: a concise guide for beginners. Sage Publications.

Sarstedt, M., & Mooi, E. (2014). A concise guide to market research. The Process, Data, and.

Van den Nieuwboer, M., Van de Burgwal, L. H. M., & Claassen, E. (2016). A quantitative key-opinion-leader analysis of innovation barriers in probiotic research and development: valorisation and improving the tech transfer cycle. PharmaNutrition, 4(1), 9-18.

Webpages.uidaho.edu. (2018). Obstacles to Information Access and Use in Developing Countries, Akobundu Dike Ugah.  Retrieved 24 March 2018, from https://www.webpages.uidaho.edu/~mbolin/ugah3.htm

West, D. C., Ford, J., & Ibrahim, E. (2015). Strategic marketing: creating competitive advantage. Oxford University Press, USA.

West, J., & Bogers, M. (2014). Leveraging external sources of innovation: a review of research on open innovation. Journal of Product Innovation Management, 31(4), 814-831.