Emerging economies
There is a form of companies called conglomerate, in India and China, they are enormous. In these countries they are highly diversified.
The biggest group in India in Tata, they have created the Tata Nano, they produce cars, agricultural chemicals, they possess hotel chains, and they deal with telecommunications and a large part of their business is due to consulting.
Reliance Industries started as a clothing company but they are in food and retailing.
There are big conglomerates but not only: in China, there is also small and intermediate companies that are very diversified as well.
There are also in these emerging economies, state-owned companies, but these companies are not like the state-owned companies of the past century, they are different from the old state-owned model (which were totally controlling the companies), this is a new type, like the 17th century: The East India company, set up by the king of England, it obeyed the king but the day to day management was taken by the head of the company, so they were Hybrid, so are those from today. The East India company was an arm ( they had soldiers) the were supposed to colonies India.
Today you have such companies in these emerging economies, these firms are backed by the state, but they are very private in their management. For ex: Lenovo in China a computering and telecom company.
You have such companies in Bresil and in the middle east too.
The 13 biggest companies in the world are controlled by governments. Ex: Gazprom
This is the case in the oil rich countries (Iran, Irak, Nigeria…)
¾ of the world’s oil reserves are controlled by governements.
2 conditions you have in emerging economies:
- You have to take enormous political (corruption, unstable gov. (central or state gov.) unpredictable, and badly organized) and financial risks (Chinese bank are extremely reluctant to lend money)
- You have Shortages in capital (no money) and in talent (private schools that are owned