Running head: EMERGING ECONOMIES 1
Supply Chain Management in Emerging Economies
Dr. Brooke Quigg
BUSI 613-B01
Lee Troope
Liberty University
May 24, 2019
EMERGING ECONOMIES 2
Avittathur, B., & Jayaram, J. (2016). Supply chain management in emerging economies.
Decision (0304-0941), 43(2), 117-124. doi:10.1007/s40622-016-0130-8
Statement of the Author’s Purpose
The main purpose or idea of this article, which the authors discuss, relates to the shortage
of research on the topic of emerging economies and the impact that these economies have on
supply chain management. According to the authors, the emerging economies with the most
impact on the global supply chain management are India, China, and Brazil (Avittathur &
Jayaram, 2016). The article focuses on two areas of importance regarding emerging economies
impact on the global supply chain, which are opportunities and challenges (Avittathur &
Jayaram, 2016). “Research indicates that, although globalization is a trend, natural resources-
based supply chains are often more geographically bounded and susceptible to local social
demands than other supply chains”[ CITATION Sil15 \l 1033 ]. Therefore, research suggest that
the supply chains faces barriers to sustainability in developing within emerging economies.
Consequently, these barriers lead to complexity and uncertainty within the supply chain making
for a turbulent business environment. The authors suggest that there is a substantial gap on how
infrastructural issues and culture could possibly affect the success of the supply chain within
emerging economies (Avittathur & Jayaram, 2016).
Application of Supply Chain Management Theory Relevant to Article
In today’s global business environment, there is a shift from developed economies to
emerging economies. The primary reason for this shift is weak performance by developed
economies. Therefore, supply chain management configuration has become increasingly volatile.
EMERGING ECONOMIES 3
In addition, firms made adjustments by creating new business models driven by customer
preference that lead to smaller distribution centers being located closer to the customer for faster
delivery. Consequently, in order for a firm to achieve success in an emerging economy,
significant change to the supply chain become necessary to face these unique challenges. As
supply chains become more global and complex, firms face pressure to reduce costs in the
manner of labor and materials.
Background of the Issue
Emerging economies provide markets with huge growth opportunities for a firm that they
cannot afford to miss. As the authors in the article suggests, countries such as Brazil, China, and
India have a huge potential that remains exploiting. A firm’s approach to the proper supply chain
development is paramount to the fundamental successful exploitation of these opportunities. The
leading supply chain performers are applying new technology, innovations, and process thinking
too far greater advantage than the laggards, reaping tremendous gains in all the variables that
affect shareholder value: cost, customer service, asset productivity, and revenue generation
(Beth, Burt, Copacino, Gopal, Lee, Lynch, & Morris, 2003). The challenges to an emerging
economy referenced by the authors include infrastructure, wide range of customer needs, volatile
commodity prices, high initial investment, and cultural differences. The “bottom of the pyramid
(BOM) that the authors mention in the article suggest that potential customers within the supply
chain take on new roles such as retailers, entrepreneurs, distributors, suppliers, and producers
(Avittathur & Jayaram, 2016). Research suggests that conducting business operations at the base
of the pyramid necessitates the need for global firms to involve poor communities in the overall
production process including management of the supply chain (Gold, Hahn, & Seuring, 2013).
EMERGING ECONOMIES 4
“Be wise in the way you act toward outsiders; make the most of every opportunity” (Colossians
4:5, New International Version). This verse suggests our wisdom or discernment regarding our
actions or walk remains in the forefront. This verse suggests we make effective use of our time at
every opportunity. The authors suggest that the bottom of the pyramid provides firms with many
opportunities to extend and exploit supply chain management research (Avittathur & Jayaram,
2016).
Managerial Implications
Managers should understand emerging economies challenges and opportunities. These
challenges require managers to recruit the world’s best talent to operate the complex supply
chain in global markets. The integration of global supply chain and distribution networks leads to
foreign trade and foreign direct investments. Managers should rely on skills and knowledge that
made them successful in developed economies when expanding into emerging economies, but
not try to apply these in emerging economies as a one size fits all scenario. This includes
marketing strategies and pricing models to meet the needs of the customers in that geographical
area. Managers should learn the societal customs, cultural differences, regulations, government
stability, taxation, monetary fluctuations in currency, transportation systems, and labor/trade laws
of the countries that the firms intends to expand to globally. Managers should attain this
knowledge before entering the geographical area and formulating a strategy. For example, the
authors in the article make note of Brazil’s poor airport output and India’s poor infrastructure,
taxation, and regulatory policies (Avittathur & Jayaram, 2016).
Managers should establish the global supply chain in emerging economies by
implementing a localized, customized, and personalized delivery and service model. Managers
EMERGING ECONOMIES 5
should pay special attention to the fact that each country with an emerging economy have few
similarities. Therefore, this increases the challenge for managers of the firm to enter and operate
in multiple emerging economies. Managers should determine their limitations of capital
availability, what competency will the firm require, and how much risk the firm is willing to
accept prior to deploying to an emerging economy. Managers should also survey these emerging
economies to determine the competitors and the firm’s reaction to these competitors. In addition,
managers should research the industry trends within these emerging economies over the short,
medium, and long term.
Summary
With emerging economies growing, the increase in disposable income among developed
countries invites the opportunity for firms to expand their supply chain globally. The
determination of success is by understanding the differences in the supply chain and operational
risks that exist within each country and region, and identifying strategies and solutions for
managing vulnerabilities and mitigating risk. Most firms entering the markets of emerging
economies do not have a plan to manage the supply chain, to grow their top line products and
services, and generate profits. They fail because managers attempt to deploy strategies from
mature markets. In conclusion, supply chain costs and risks increase when operation in emerging
economies. Therefore, it is important for managers of a firm to anticipate threats and implement
strategies to contain costs and mitigate risks to ensure a successful business venture.
EMERGING ECONOMIES 6
References
Avittathur, B., & Jayaram, J. (2016). Supply chain management in emerging economies.
Decision (0304-0941), 43(2), 117-124. doi:10.1007/s40622-016-0130-8
Beth, S., Burt, D. N., Copacino, W., Gopal, C., Lee, H. L., Lynch R. P., & Morris, S. (2003).
Supply chain challenges: building relationships. Harvard Business Review, 81(7), 64-73,
117.
Gold, S., Hahn, R., & Seuring, S. (2013). Sustainable supply chain management in "Base of the
Pyramid" food projects--A path to triple bottom line approaches for multinationals.
International Business Review, 22(5), 784-799. doi:10.1016/j.ibusrev.2012.12.006
Silvestre, B. S. (2015). Sustainable supply chain management in emerging economies:
environmental turbulence, institutional voids and sustainability trajectories. International
Journal of Production Economics, 167, 156-169. doi:10.1016/j.ijpe.2015.05.025
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