March 14, 2013

Growing middle class set to affect emerging markets

Businesses in any industry have to ensure that they are able to meet the needs of their customers. As consumer interests change, companies must make necessary adjustments in order to stay successful.

This blog has previously discussed recent technology mergers and acquisitions, and how companies have chosen to go that route in order to better meet the changing needs of customers.

The middle class in particular is expected to increase in size, which will also affect how businesses will work on a day-to-day basis. According to a recent Ernst & Young report, "Innovating for the next three billion, the rise of the global middle class – and how to capitalize on it," the next ten years will change drastically for growth patterns as emerging markets steer away from dependence on infrastructure.

For example, in Asia alone nearly 525 million people are in the middle class and by 2030, an additional three billion people globally will enter this income bracket.

According to the report, the strengthening of the middle class, which it refers to as the "next three billion," gives companies a rare and highly valuable opportunity to seize a new market of unprecedented size. Businesses must think differently about how they align their operations and find new ways to innovate in order to meet these new consumers' needs.

"Innovating for the next three billion, then, is not just about formulating a rapid-growth market strategy, but also understanding the similarities across markets as well as the differences. Companies should draw on global resources and re-apply ideas and knowledge in other markets-whether rapid-growth or developed," Herb Engert , Americas Strategic Growth Markets Leader for Ernst & Young LLP, said in the press release.

Entrepreneurs that are trying to cater to changing markets might be considering working with fellow businesses in their industry. If this is the case, forming a comprehensive company valuation strategy will be of great assistance. A well-formed financial plan is crucial to assist in any opportunities.