Many companies approach emerging markets one country at a time. Those that endure think differently: they manage a portfolio and master a terrain of rare complexity. A look at a discipline that remains underdeveloped, even, paradoxically, among local champions in these markets.

International failure is often blamed on the wrong product or the wrong market. Field observation suggests a more structural cause: the difficulty of managing not one market, but a set of markets.

“In a basket of emerging countries, every year a handful outperform, another handful suddenly turn around under the effect of exchange rates, politics, the economic cycle or a change in standards, while the majority remain stable without ever really taking off,” observes Ferreol Tournebize, who has spent nearly twenty years in these markets, from Africa to the Middle East. Growth does not come from one star market: it comes from the discipline with which this dispersion is managed. But managing dispersion is not enough. One must also survive a terrain that discourages most large groups.

A maturity curve

This discipline follows a progression that can be seen everywhere. Small companies approach export opportunistically: a request comes in, a distributor appears, a first foreign customer is won, but without a clear direction or a reading of risk.

Mid-sized companies professionalize: an export manager, an international department, then a portfolio of markets built country by country. Large groups, meanwhile, already think in regional hubs and constantly arbitrate between stability, potential and level of investment.

The higher one moves along this curve, the less markets are simply endured, and the more they are weighted.

The portfolio rule

The core reasoning lies in a number effect. Across a sufficiently broad basket, the winning countries, which mechanically capture more sales, pull the whole upwards, even when several markets decline. With twenty- five countries, the aggregated result can remain clearly positive even if one fifth of the portfolio falls.

With only five or six markets, everything depends on the draw: two bad countries can be enough to sink the year. “Diversification does not remove risk; it makes it manageable.” Each market still has to be weighted by its macroeconomic stability, FX exposure, political risk and real potential.