After the BRICS.

8/16/2019 After the BRICS.

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Alexis Solis Cancino Global Strategy 000130502

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AFTER THE BRICS – WHAT NOW?

1. Introduction

Gary Halberd, CEO and founder of GENICON, a United States manufacturer anddistributor of medical devices for laparoscopic surgery, had one major concern near the

end of the year 2014: which international market should his company expand to. He had

previously tried to expand to the BRIC countries (Brazil, Russia, India and China), with

somewhat dubious results in two of the countries and great results in the other two. The

greatest challenge to the company now was figuring out which market it should enter

into and what’s the best method to do so.

2. Problem Statement

Knowing which market GENICON should enter into is difficult, for it must gather a great

deal of information regarding taxes and tariffs, government regulations, matters related

to corruption, exchange rates risk, and other barriers it might encounter in each country.

However, it is key for GENICON to choose the right country if it wants to continue

growing.

3. Analysis

3.1 Should GENICON expand to new and emerging markets?

Should GENICON even consider expanding to new emerging markets? Or should it

focus its efforts on increasing market share in its existing markets? The most probable

answer is that it should choose to expand. There are several reasons supporting such

answer:

1. The company’s success appears to come from its international expansion

strategy.

2. International, emerging markets are expected to have a greater growth in terms

of minimal invasive surgery than the United States (GENICON’s main market).

China is a great example of such phenomenon.3. Its current markets’ demand could begin to decelerate (like the United States did)

or new government regulations could cause a growth deterioration.

4. Expanding towards other markets alleviates the company’s exposure to risk in

terms of each countries’ conditions.

5. Laparoscopic surgery has many advantages and therefore, many countries

should want to have access to it. Being the first mover into a market that


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competitors haven’t explored yet could result in astonishing growth for the

company should it turn out to be a right choice.

3.2 Which country should it choose? Guidelines to a good choice.

GENICON should first do a proper analysis of the most promising countries in terms ofgrowth demand for laparoscopic surgery. GENICON’s choice will determine its possible

gaining of advantages against its competitors, growth and costs of entry. Therefore, it is

of the uttermost importance to make the right choice.

There are some key aspects that a country should have in order to be a potential great

market. Some of them might be:

Choose a fast country in terms of population growth.

Choose a country in which importation in medical devices has increased during

the last few years. Choose a country that faces a deficit in terms of medical infrastructure, causing its

government to react and aid the company to expand to such country.

Choose a country that has no fragmented healthcare system (i.e. almost all of the

population should have access to good medical aid) but is in need of innovation

and high-quality products and procedures.

China and India provide very good guidelines in terms of choice, since both countries

resulted in amazing results for the company. GENICON should extract the main features

that aided such results from each country and try to look for that in other potential

markets.

Additionally, GENICON should search for what it is not looking for in a country (adverse

conditions). Some of these might include:

Countries with potential political instability or protectionism approaches to

international trade (such as Venezuela, for example).

Countries that require too much investment and government involvement into

their healthcare system thus making a sustainable growth impossible.

Countries that have shortage of medical personnel and human resources leadingto unsatisfactory results. (Mexico is an example of such a problem)

Countries that do not have patent protection.

Finally, a key aspect to choosing the right country is the method of entry. Should it enter

into the public sector? Or is it easier to enter via the private sector?


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3.3 What about a MIST expansion after the BRIC expansion?

An interesting solution to narrowing down the decision is considering the successors of

the BRIC countries: the MISTs (Mexico, Indonesia, South Korea, and Turkey). All four

countries have experienced fast growth during the last 20 years, and they all have

benefited from benefit from the globalization of companies. According to 2012 data from

the OECD, the average growth was 4.9% for South Korea, 4.6% for Indonesia, 4.2% for

Turkey, and 2.6% in Mexico during the years of 1993-2011. Furthermore, the sum of their

GDPs would represent the fourth largest economy in the world, only after the USA, China

and Japan.

Source: Bloomberg

4. Recommendations

In order to make a good decision, GENICON should explore quantifiable measures (e.g.

government’s expenditures on healthcare as % of the GDP) and qualitative measures

(such as corruption levels). GENICON’s main concerns should be its potential growth in

such country, the potential barriers of entry, the potential competitors and finally, its

entering strategy. GENICO has demonstrated a great ability to expand since it showed

exceptional adaptation skills as seen during its European Union and BRICs expansions.

To continue flourishing it must apply these abilities combined with a healthyenvironment for healthcare products companies.

The possibility of a MIST expansion after the previously successful BRIC expansion is an

attractive solution. Furthermore, an expansion to such countries could present similar

conditions to the ones BRIC countries had, and GENICON ’s experience could make it a

easier process.

After the BRICS.

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