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Doing Business in Emerging Economics Collection
GONCALVES • ALVES • ARCOT
Markets Philip J. Romero and Jeffrey A. Edwards, Editors
Roadmap for Success
Marcus Goncalves • José Alves
• Rajabahadur V. Arcot
Doing
This book provides a good review of the challenges fac-
ing business in the emerging markets and initiates
Business in
the discussion of the roadmap necessary for success. I
found it thought-provoking and recommend it to anyone
with a desire to take their business from local to global.
Emerging
—Jayshree Pandya, Founder Risk Group LLC (http://
www.riskgroupllc.com) and ­author of the book, The
Global Age: NGIOA @ Risk
Markets
This book provides a complete review about political
and economic impacts in developing business abroad.
It shows a very interesting historical review with recent
DOING BUSINESS IN EMERGING MARKETS
facts clearly punctuated. You will enjoy it. —Osvaldo
Costa, Senior HR Manager at Tigre S.A., Joinville, Roadmap for Success
Santa Catarina, Brazil
Marcus Goncalves is an Associate Professor of
­Management and Chair of the International Busi-
ness Program at Nichols ­College, with 28 years of
Marcus Goncalves
international management ­
consulting ­
experience
in Latin America, Europe, ­Middle East, Asia, and the
U.S.
José Alves
Rajabahadur V. Arcot
José Alves, is an Associate Professor of Manage-
ment at the Faculty of Business, Government,
and Social Work of the U
­ niversity of Saint Joseph,
­Macau.
Rajabahadur V. Arcot is an Independent Industry
Analyst/Columnist and Business Consultant with
around 40 years of senior managerial experience.
Economics Collection
Philip J. Romero and Jeffrey A. Edwards, Editors
ISBN: 978-1-63157-017-9
Doing Business in
Emerging Markets
Doing Business in
Emerging Markets
Roadmap for Success

Marcus Goncalves, José Alves,

and Rajabahadur V. Arcot
Doing Business in Emerging Markets: Roadmap for Success
Copyright © Business Expert Press, LLC, 2015.
All rights reserved. No part of this publication may be reproduced,
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First published in 2015 by

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To my forever-beautiful wife, Carla, and my son Samir,
both living here on earth, and to my children
Andrea and Joshua, who are now living in Heaven.

To God be the glory!

Marcus Goncalves
Summer 2014

I would like to dedicate to my loving parents

Venkataraman V. Arcot and Tarabai V. Arcot,
now living in Heaven.

Rajabahadur V. Arcot
 Abstract
Doing Business in Emerging Markets reflects the challenges and oppor-
tunities facing international businesses and professionals when operating
in emerging markets, particularly in the wake of the financial crisis of
2008. This book is filled with valuable information and real-world facts
and examples from across the globe. It covers all the key topics on con-
ducting business in emerging markets, addressing important aspects of
entering a new market, as well as post-entry issues and strategies, such
as dealing with corruption, the application of the United States Foreign
Corrupt Practice Act (FCPA), international market research and more,
demonstrating how the emerging market context challenges traditional
international business theories and even best practices.
Marcus Goncalves, Fall 2014.

Keywords
emerging markets, FCPA, global corruption, global crime, international
business, international marketing research
 Contents
Acknowledgments�����������������������������������������������������������������������������������xi

Chapter 1 Entering an Emerging Market������������������������������������������1

Chapter 2 The Importance of Market Research
and Business Intelligence �����������������������������������������������21
Chapter 3 Coping With Political and Economic Risks��������������������37
Chapter 4 FCPA: Dealing With Corruption and Crime������������������67
Chapter 5 Coping With the Global and Emerging Market Crisis����95

About the Authors�������������������������������������������������������������������������������123

Advance Quotes for Doing Business in Emerging Markets����������������������125
Notes�������������������������������������������������������������������������������������������������127
References�������������������������������������������������������������������������������������������131
Index�������������������������������������������������������������������������������������������������149
 Acknowledgments
There were many people who helped us during the process of writing this
book. It would be impossible to keep track of them all. Therefore, to all
that we have forgotten to list, please don’t hold it against us!
We would like to thank Dr. Patrick Barron, professor at the Graduate
School of Banking at the University of Wisconsin, Madison, and of
Austrian economics at the University of Iowa, in Iowa City for his contri-
butions on the issue of currency wars in chapter 5. Many thanks also to
ambassador M.K. Bhadrakumar, former diplomat in the Indian Foreign
Service with assignments in the Soviet Union, South Korea, Sri Lanka,
Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait, and Turkey for his
valuable insights and contributions to foreign policy issues in the MENA
region.
 CHAPTER 1

Entering an Emerging
Market
Overview
Entering an emerging market is not easy. In our experience in teaching
this topic, consulting for several multinational corporations around the
world, and being a practitioner ourselves, we find that emerging markets
are tough to enter. Government interference, backward infrastructure,
and a lack of skilled workers require a lot of patience, perseverance, and
specialized assistance. Opportunities in the emerging markets come with
their own set of challenges. For instance, often lack of education of the
workforce translates into thwarted growth being curbed by a lack of a
skilled workforce. Other challenges that arise are legal frameworks with
regard to trade policies, which may be absent or underdeveloped, or ten-
dencies for political paternalism or blatant interferences, which we see in
India and Latin America.
Compare the above to the advanced economies, which, despite the
fact that growth has been flat to negative since 2008, continues to super-
sede emerging markets. When looking at the EU, the 27-member coun-
tries allow for labor mobility and a free flow of goods without tariff or
nontariff restrictions. Furthermore, the workers in many EU countries are
highly educated and have conferred great reputations for their economies.
“German engineering” is well known around the world for its high level
of quality, the same cannot be said for Indian or Russian engineering.
India has been making progress in opening its economy, but its polit-
ical response to a much-needed foreign investment is troubling. Large
foreign retailers such as IKEA are willing to employ thousands of Indi-
ans, but politicians continue to fret about mom-and-pop stores and other
small businesses that may be displaced. In 2012, politicians forbade IKEA
from selling half its product line in India. In 2012, the deputy chief
2 DOING BUSINESS IN EMERGING MARKETS

minister for Punjab went as far as to declare that there was no need for
foreign-owned discount retail chains because there are already a multitude
of stores selling cheap goods.1
Foreign investors become confused and frustrated with these types of
patriarchal decisions such as these. Although many nations have transi-
tioned from autocratic rule to democracies with free markets, some con-
tinue to dabble in market interference. Take Argentina as an example,
where President Cristina Fernández de Kirchner, to prevent a run on the
peso by Argentines, has put strict currency controls in place. It is not
wonder that in an annual World Bank study titled Doing Business (2013),
New Zealand, Singapore, and Hong Kong ranked first, second, and third
place respectively in protecting investors, while Argentina ranks 98.2
Emerging markets such as India and China have huge and growing
populations and thus demand rapid growth rate if they are to make any
headway in social development. If India’s economic growth falls below six
percent the nation would be in crisis, whereas in most advanced econo-
mies, such as the United States, if the economy grew at that rate it would
risk overheating.
India can barely keep up with educating its rising populations. It
needs as many as 1,000 new universities and 35,000 new colleges if it
is to achieve its stated goal of raising post-secondary enrollment from
12 percent today to 30 percent by 2020. Meanwhile, Mexico is turning
out more engineers and engineering technicians a year than Germany,
and it must scramble to ensure they all get jobs. To fail would be to spawn
social unrest.
Another key factor when considering entering emerging markets is
the distance between emerging markets, which can hamper trade. One
study found that a 10 percent increase in distance between north-to-
north traders reduces trade by 10 percent; the same distance between
south-to-south traders reduces trade by 17 percent.3
An improved policy would make an important difference in resolv-
ing such problems but emerging market have yet to demonstrate serious
desires for true bilateral cooperation. Although the ASEAN nations have
a trade agreement, it has yet to yield much economic improvement, as
the bloc has yet to turn their loose organization into a trading block, even
though economic integration has been touted as a central pillar.
 Entering an Emerging Market 3

Public administration in emerging markets has much to be desired.

The 2013 Doing Business4 study by the World Bank ranks Brazil, Russia,
India, China, and South Africa (BRICS) as 116th, 92nd, 134th, 96th,
and 41th respectively out of 189 countries.
Infrastructure remains a significant problem in most emerging mar-
kets. China continues to invest heavily in roads, railways, and ports, but
elsewhere the progress is weak. India has called for $1 trillion in infra-
structure modernization but it lacks the funds to do so independently
and its politicians remain suspicious of external sources of capital. The
situation is no different in Latin America, in fact, it is arguably worse, as
80 percent of Latin Americans live in cities, compared to fewer than half
of Asians. The need for modern urban infrastructure is urgent. Brazil, for
instance, wants to improve its infrastructure, which is a bottleneck for
the outflow of many of its export products, but it is moving glacially. It
has been so slow that Sao Paulo’s underground rapid transit system covers
only one-tenth of the distance of the one in Seoul, South Korea.*
Does all this mean that foreign investors should avoid trading with or
investing in emerging markets? On the contrary, however, any organized
program of opening up to emerging markets must include specialized
expertise, on-the-ground knowledge, local partnerships, and, most of all,
patience.

Why Multinationals Fail in Emerging Markets

Pacek and Thorniley5 identified an exhaustive range of factors contribut-
ing to the failure of companies from advanced economies into emerging
markets. These factors may be divided into external and internal factors
and almost all are related to strategic and leadership issues:

• Leaders fail to consider emerging markets as an integral part

of strategy and acknowledge that such markets need to be
approached with a distinct set of criteria for judging progress
and success.

* Ibidem.
4 DOING BUSINESS IN EMERGING MARKETS

• Top leaders fail to commit sufficient resources to get busi-

nesses established and growing in emerging markets, or
acknowledge that it is never a short-term affair.
• Companies fail to appoint a head manager for emerging
markets and often assign this responsibility to an international
manager who is responsible for markets in both developed
and emerging countries. The problem with this is that opera-
tional approaches are distinct in each of these markets.
• Companies fail to understand that business is driven by heads
of regions and business units rather than by heads of func-
tional areas. While the former have a focus and appreciation
for the emerging markets, the latter tend also to be interested
in developed markets.
• Companies do not acknowledge that emerging markets oper-
ate under distinct business models and structures, and often
merely transfer practices tested in developed markets without
considering adaptation.
• The board members of many companies have limited
diversity in terms of culture and ethnic background and do
not develop sufficient appreciation for the peculiarities of
emerging markets.
• Multinationals underestimate the potential and often early
competition from smaller international and domestic com-
panies, thus never accepting that they may be destined as a
follower in emerging markets.
• Economic and political crisis also exist in emerging markets
and have a significant impact on business performance. Top
managers need to understand this, be prepared to adapt and
introduce new tactics rather than changing strategy, which
despite having short-term success, tend to be the wrong
approach in the long term.
• Companies get alarmed by short-term slippages and cut costs to
attain favorable temporary results, yet this is likely to have a struc-
tural impact on strategy implementation and long-term results.
• Companies set unrealistic targets to achieve, which leave man-
agers with limited maneuvering space and short-lived careers.
 Entering an Emerging Market 5

• Companies fail to recognize that entering the market early is

fundamental in establishing networks, developing brands and
learning the larger context from which it will operate.
• Senior leaders fail to recognize that developing a network
of reliable contacts often requires establishing friendships
with locals, which requires time and visibility in emerging
markets.
• Companies fail to empower regional and country managers
and delegate decision-making power to local managers.
• Foreign companies fail to recognize that emerging markets are
more price-sensitive and often stick to their pricing structures
instead of adapting to local sensitivities.
• International firms fail to recognize that their product
portfolio is not tailored to the lower and middle segments of
emergent markets and do not develop innovations that are
context-oriented.
• Foreign companies underestimate the competition from local
companies in emergent markets. Local companies understand
better than anyone about local markets, sometimes employ
dubious practices, and often have the support of local govern-
ments.
• One of the largest obstacles that foreign companies face
may be the unwillingness to change long-standing business
practices.
• Another challenge is to appoint senior managers who are
not familiar with the local market, culture, and language in
emerging countries.
• Multinationals that focus too much on the larger emerging
markets, such as BRIC, may neglect smaller markets and miss
better-suited opportunities.
• The fact that demand is volatile and unpredictable in emer-
gent markets may discourage multinationals, which often
expect reliable market information.

The failure factors are numerous and diverse but as Pacek and
Thorniley noted it all boils down to a lack of adequate market entry
6 DOING BUSINESS IN EMERGING MARKETS

preparation. Preparation requires companies to continuously research the

external environment and know how to use internal resources to take
advantage of opportunities. Hence, a preliminary audit that focuses on
external and internal factors is essential. The external factors may be
examined by posing questions concerning the market, the political envi-
ronment, the economic environment, and the business environment, as
depicted in Table 1.1.

Table 1.1 External factors and sample questions

Understanding the market
Market potential • How large and wealthy is the market?
• Is there unsatisfied demand for the product/service?
Understanding • Who are the consumers/customers? What are their
local consumers/ characteristics?
customers • How do consumers make their decisions?
Reaching the • How difficult/easy is it to reach potential consumers/
consumer/customer customers?
• How do competitors and non-competitors reach their
customers?
Competition • Which competitors are already operating in the market?
• How strong are these competitors?
Lessons learned by • What do noncompetitors say about the business environment
noncompetitors in the country?
• What have been the largest obstacles to successful
operations?
Local culture • What aspects of local culture are relevant to running a
successful local business?
Understanding the political and economic environment
Economic outlook • How sustainable is economic growth?
• What is driving economic growth?
Political outlook • What is the level of political risk and how will or might affect
the business?
Government • Does the government allow a level playing filed?
policies • Is the government in the hands of local lobbies?
Understanding the business environment
Finance • Is it possible to finance operations locally?
• What access do customers/consumers have to finance?
Labor market • What are the wage/salary rates for the employees who will be
needed?
• What are the most effective ways of recruiting local employees?
 Entering an Emerging Market 7

Understanding the business environment

Taxation • What are the current levels of taxation?
• What is the outlook for tax incentives?
Legal environment • How effective and efficient is the local judiciary?
• Is there any hope that the legal system will improve?
Bureaucratic • What are the most common bureaucratic obstacles for
obstacles to business?
business • How easy or difficult it is to set up business in the country?
Crime and • Is crime a problem for business?
corruption • What is the level of corruption?
Infrastructure • What is the quality of local transport infrastructure?
• And telecommunications?
Foreign trade • Is the country a WTO member?
environment • Does it belong to any trading blocs or regional free-trade
areas?
Cost of building a • How expensive is it to build a brand?
business and brand • How much time will it take to do what is necessary to get the
business off the ground?

Table 1.2 Internal factors and sample questions

Resources • How much time and money will be required?
• Is the CEO committed to support business development and
provide necessary resources? And the senior managers?
• What human resources are needed?
Products • Is the product portfolio right for the market?
• Will investment be available for developing new products?
Organization • Will existing internal processes and operational practices help
or hinder what is planned?
• What existing capabilities can be drawn?
Risks • Can the risks that have been identified be managed?
• How would entry be financed?

By the same token, the internal factors must inquire about resources,
products, organization, and risks, as depicted in Table 1.2.
Having done a preliminary external and internal audit, managers need
to prepare a business proposal describing what to do, how to do it, by
when, and resources required. Business must then ask themselves whether
there are similar or better opportunities available in other ­emerging mar-
kets. How then, can we compare the potential of different emerging
markets?
8 DOING BUSINESS IN EMERGING MARKETS

Ranking Emerging Markets

According to the GlobalEdge6 team at the International Business Center
(IBC) at The Eli Broad Graduate School of Management, Michigan
State University, there are three main reasons why emerging markets are
attractive. They are target markets, manufacturing bases, and sourcing
destinations.
As target markets they present a growing middle class with substan-
tial demand for consumer products and services. They are also excellent
targets for electronics, automobiles, and healthcare services. The textile
(machinery) industry in India is huge, oil and gas exploration plays a vital
role in Russia, agriculture is a major sector in China, and airplanes are
almost everywhere.
As manufacturing bases they present advantages such as low-wages,
high quality labor for manufacturing and assembly operations. South
Africa is a key source for industrial diamonds; Thailand has become an
important manufacturing location for Japanese MNEs such as Sony,
Sharp, and Mitsubishi; Malaysia and Taiwan are home to manufacturing
of semiconductors by MNEs such Motorola, Intel, and Philips; and in
Mexico and China we find platforms for consumer electronics and auto
assembly.
As sourcing destinations the emerging markets also are using their
advantages to attract MNEs. MNEs have established call centers in East-
ern Europe, India, and the Philippines; Dell and IBM outsource certain
technological functions to knowledge workers in India; and Brazil is a
leading raw material supplier namely in oil and agriculture.
The Emerging Market Potential Index (EMPI) was based on Cavus-
gil indexing approach and developed by the GlobalEdge team to assess
7

the market potential of Emerging Markets. As shown in Table 1.3, EMPI

is based on eight dimensions: market size, market growth rate, market
intensity, market consumption capacity, commercial infrastructure, eco-
nomic freedom, market receptivity, and country risk. Each dimension is
measured using various indicators and are weighed in determining the
overall index. The result is a score on a scale from 1 to 100.
Table 1.3, based on Cavugil, Kiyak, and Yeniyurt8 indicator, is useful
in that it provides the relative position of each country but is lacking
Table 1.3 Market potential index (MPI), 2014
Market Market
Overall Overall Market Market growth consumption Commercial Market Economic Country
rank Country score size intensity rate capacity infrastructure receptivity freedom risk
1 China 100 100 4 100 98 56 9 23 80
2 Hong Kong 56 2 100 62 31 96 100 100 95
3 Japan 54 21 77 49 100 81 9 70 90
4 Canada 53 9 80 55 63 89 65 77 90
5 Singapore 50 2 76 76 33 83 89 70 100
6 Germany 48 12 79 48 85 94 18 71 83
7 India 46 37 36 77 57 14 9 47 64
8 Switzerland 41 2 94 52 48 89 36 78 90
9 United 41 8 85 43 69 93 15 72 75
Kingdom
10 South Korea 41 10 59 67 60 78 21 63 83
11 France 41 10 72 46 72 94 12 61 75
12 Australia 41 5 75 59 60 96 14 79 83
13 United Arab 38 2 66 91 37 88 43 43 74
Emirates
Entering an Emerging Market

14 Norway 37 3 84 62 49 82 16 68 90

(Continued)
9
 10

Table 1.3 Market potential index (MPI), 2014 (Continued)

Market Market
Overall Overall Market Market growth consumption Commercial Market Economic Country
rank Country score size intensity rate capacity infrastructure receptivity freedom risk
15 Russia 36 19 41 71 51 81 8 28 64
16 Austria 36 2 77 51 51 97 19 70 83
17 Netherlands 36 3 63 40 53 84 40 71 75
18 Belgium 36 3 69 50 44 80 43 67 75
19 Sweden 35 3 67 52 53 90 16 70 90
20 Brazil 34 18 48 62 41 58 6 50 69
DOING BUSINESS IN EMERGING MARKETS

21 New Zealand 33 2 67 62 41 88 14 78 83
22 Denmark 33 2 68 39 54 94 18 73 83
23 Ireland 32 1 55 41 42 100 36 73 75
24 Italy 32 8 72 33 65 74 11 59 59
25 Mexico 31 10 61 62 39 40 23 54 70
 Entering an Emerging Market 11

analysis as it does not provide what the data actually mean, what manag-
ers can do with this data.

From Indicators to Institutions

It is common wisdom that size and growth potential are the two best cri-
teria to select an emerging market. Not so for Khanna and Palepu9 who
argue that lack of institutions, such as distribution systems, credit cards
systems, or data research firms, is the primary factor to consider when
entering into an emerging market. For them, the fact that emerging mar-
kets have poor institutions, thus, inefficient business operations, present
the best business opportunities for companies operating in such dynamic
markets. However, the way businesses enter into emerging markets is dif-
ferent, and are contingent upon variations presented by the institutions
and the abilities of the firms.
Khanna and Palepu point out that the use of composite indexes
to assess the potential of emerging markets, as executives often do,
has limited use because these indicators do not capture the soft infra-
structures and institutions. These composite indexes are useful in rank-
ing market potential of countries when and only these countries have
similar institutional environments. When soft infrastructures differ
we must then look at the institutional context in each market. In fact
when comparing the composite indexes of the BRIC countries we find
that they are similar in terms of competitiveness, governance, and cor-
ruption. Yet the key success factors for companies in the BRIC differ
significantly from country to country. Take for example the retail chain
industry.
In China and Russia retail chain operators, both multinationals and
local companies, converge in urban and semi-urban areas. In contrast, in
Brazil very few multinational retail chains are located in urban centers,
and in India we find even fewer international retail chains due to govern-
ment restrictions that until 2005, did not allow foreign direct investment
in this industry. Thus, when looking at the economic indicators of the
BRIC countries we find that increased consumption provides opportuni-
ties for retail operators.
12 DOING BUSINESS IN EMERGING MARKETS

Best Opportunities Fill in Institutional Voids

From an institutional view the market is a transactional place embedded

in information and property rights, and emerging markets are a place
where one or both of these features are underdeveloped.* Most defini-
tions of emerging markets are descriptive based on poverty and growth
indicators. In contrast a structural definition as proposed by Khanna and
Palepu points to issues that are problematic therefore allowing an imme-
diate identification of solutions. Moreover, a structural definition allows
us not only to understand commonalities among emerging markets but
also to understand what differentiates each of these markets. Finally, a
structural approach provides a more precise understanding of the market
dynamics that genuinely differentiates emerging markets from advanced
economies.
To illustrate, let us contrast the equity capital markets of South Korea
and Chile. According to the IFC definition, Korea is not an emerging
market because it is an OECD member, however, when we look at its
equity capital market we notice that until recently it was not functioning
well, in other words it has an institutional void. Chile on the other hand
is considered an emerging market in Latin America but has an efficient
capital market, thus no institutional void appears in this sector. However,
Chile has institutional voids in other markets such as the products market.
Strategy formulation in emerging markets must begin with a map of
institutional voids. What works in the headquarters of a multinational
company does not per se work in new locations with different institu-
tional environments. The most common mistake companies do when
entering emerging markets is to overestimate the importance of past
experience. This common error reflects a recency bias, or when a person
assumes that recent successful experiences may be transferred to other
places. A manager incorrectly assumes that the way people are motivated
in one country would be the same in the new country (context). It may
be assumed that everyone likes to be appreciated, but the way of express-
ing appreciation depends on the institutional environment. Khanna and
Palepu point out that the human element is the cornerstone of operating

* Ibidem.
 Entering an Emerging Market 13

in new contexts. Ultimately, human beings, who provide a mix of history,

culture, and interactions, create institutions.
In short, based on Khanna and Palepu’s institutional approach to
emerging markets it is necessary to answer several questions. Which insti-
tutions are working and missing? Which parts of our business model (in
the home country) would be affected by these voids? How can we build
competitive advantage based on our ability to navigate institutional voids?
How can we profit from the structural reality of emerging markets by
identifying opportunities to fill voids, serving as market intermediaries?

Strategies for Emerging Markets

The work of Khanna and Palepu indicates that there are four generic
strategic choices for companies operating in emerging markets:

• Replicate or adapt?
• Compete alone or collaborate?
• Accept or attempt to change market context?
• Enter, wait, or exit?

Emerging markets attract two competing types of firms, the developed

market-based multinationals and the emerging market-based companies.
Both bring different advantages to fill institutional voids. Multinational
enterprises (MNEs) bring brands, capital talent, and resources, whereas
local companies contribute with local contacts and context knowledge.
Because they have different strengths and resources, foreign and domestic
firms will compete differently and must develop strategies accordingly.
Table 1.4 summarizes the strategies and options for both multina-
tional firms and local companies.
An example of how companies fill institutional voids is provided by
Anand P. Arkalgud (2011).10 Road infrastructure in India is still under-
developed in terms of quality and connectivity. Traditionally, Tata Motors
has been the dominant player in the auto industry but when it started to
receive competition from Volvo in the truck segment and by J­apanese
auto makers in the car segment Tata responded. It created a mini-truck
that not only provided more capacity and safety than the two and
14 DOING BUSINESS IN EMERGING MARKETS

Table 1.4 Responding to institutional voids

Options for
Strategic multinationals from
choice developed countries
Replicate or • Replicate business model,
adapt? exploiting relative advantage
of global brand, credibility,
know-how, talent, finance,
and other factor inputs.
• Adapt business models,
products, or organizations to
institutional voids.
Compete • Compete alone.
alone or • Acquire capabilities to
collaborate? navigate institutional voids
through local partnerships
or JVs.
Accept or • Take market context as given.
attempt to • Fill institutional voids in
change market service of own business.
context?
Enter, wait, or • Enter or stay in market spite
exit? of institutional voids.
• Emphasize opportunities
elsewhere.
Options for emerging
market-based companies
• Copy business model from
developed countries.
• Exploit local knowledge,
capabilities, and ability to
navigate institutional voids to
build tailored business models.
• Compete alone.
• Acquire capabilities from
developed markets through
partnerships or JVs with
multinational companies to
bypass institutional voids.
• Take market context as given.
• Fill institutional voids in
service of own business.
• Build business in home mar-
ket in spite of institutional
voids.
• Exit home market early in
corporate history if capabili-
ties unrewarded at home.

Source: Khanna and Palepu (2010)

three-wheeled pollutant vehicles used to access market areas but also an

environmentally sound vehicle, one that could easily maneuver U-turns
in such narrow streets.
Another case in India involved Coca Cola, who discovered that their
beverages were being sold “warm.” Coca Cola realized that it needed a
solution to sell its product “chilled.” The reason for the warm bottles was
that electricity supplies in these remote locations were unstable especially
in summer periods. Thus the company developed a solar-powered cooler
and partnered with a local refrigeration company.
Tarun Khanna and Krishna Palepu propose the following five contexts
as a framework in assessing the institutional environment of any country.
The five contexts include the markets needed to acquire input (product,
 Entering an Emerging Market 15

labor, and capital) and markets needed to sell output. This is referred to
as the products and services market. In addition to these three dimen-
sions the framework includes a broader sociopolitical context defined by
political and social systems and degrees of openness. When applying the
framework managers need to ask a set of questions in each dimension. An
example of these questions is indicated in Table 1.5 below.

Table 1.5 Framework to assess institutional voids

Institutional
dimension Questions
Product 1. Can companies easily obtain reliable data on customer tastes
markets and purchase behaviors? Are there cultural barriers to market
research? Do world-class market research firms operate in the
country?
2. Can consumers easily obtain unbiased information on the quality
of the goods and services they want to buy? Are there indepen-
dent consumer organizations and publications that provide such
information?
3. Can company’s access raw materials and components of good
quality? Is there a deep network of suppliers? Are there firms that
assess suppliers’ quality and reliability? Can companies enforce
contracts with suppliers?
4. How strong are the logistics and transportation infrastructures?
Have global logistics companies set up local operations?
5. Do large retail chains exist in the country? If so, do they cover
the entire country or only the major cities? Do they reach all
consumers or only wealthy ones?
6. Are there other types of distribution channels, such as direct-
to-consumer channels and discount retail channels that deliver
products to customers?
7. Is it difficult for multinationals to collect receivables from local
retailers?
8. Do consumers use credit cards, or does cash dominate transac-
tions? Can consumers get credit to make purchases? Are data on
customer creditworthiness available?
9. What recourse do consumers have against false claims by compa-
nies or defective products and services?
10. How do companies deliver after-sales service to consumers? Is it
possible to set up a nationwide service network? Are third-party
service providers reliable?
11. Are consumers willing to try new products and services? Do
they trust goods from local companies? How about from foreign
companies?
12. What kind of product-related environmental and safety regulations
are in place? How do the authorities enforce those regulations?

(Continued)
16 DOING BUSINESS IN EMERGING MARKETS

Table 1.5 Framework to assess institutional voids (Continued)

Institutional
dimension Questions
Labor markets 1. How strong is the country’s education infrastructure, especially
for technical and management training? Does it have a good
elementary and secondary education system as well?
2. Do people study and do business in English or in another interna-
tional language, or do they mainly speak a local language?
3. Are data available to help sort out the quality of the country’s
educational institutions?
4. Can employees move easily from one company to another? Does
the local culture support that movement? Do recruitment agen-
cies facilitate executive mobility?
5. What are the major post recruitment-training needs of the people
that multinationals hire locally?
6. Is pay for performance a standard practice? How much weight do
executives give seniority, as opposed to merit, in making promo-
tion decisions?
7. Would a company be able to enforce employment contracts with
senior executives? Could it protect itself against executives who
leave the firm and then compete against it? Could it stop employ-
ees from stealing trade secrets and intellectual property?
8. Does the local culture accept foreign managers? Do the laws
allow a firm to transfer locally hired people to another country?
Do managers want to stay or leave the nation?
9. How are the rights of workers protected? How strong are the
country’s trade unions? Do they defend workers’ interests or only
advance a political agenda?
10. Can companies use stock options and stock-based compensation
schemes to motivate employees?
11. Do the laws and regulations limit a firm’s ability to restructure,
downsize, or shut down?
12. If a company were to adopt its local rivals’ or suppliers’ business
practices, such as the use of child labor, would that tarnish its
image overseas?
Capital markets 1. How effective are the country’s banks, insurance companies, and
mutual funds at collecting savings and channeling them into
investments?
2. Are financial institutions managed well? Is their decision making
transparent? Do noneconomic considerations, such as family ties,
influence their investment decisions?
3. Can companies raise large amounts of equity capital in the stock
market? Is there a market for corporate debt?
4. Does a venture capital industry exist? If so, does it allow individu-
als with good ideas to raise funds?
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natural relationship of one idea to another—and its conscious
recognition at the time of observation, or later, during reflection, that
one’s memory is aided. This is what psychologists have always
called “the law of the association of ideas.” It is a natural law, which
even a child unconsciously recognizes. The baby subconsciously or
instinctively knows that food and its pleasant sensations of comfort
are associated with its mother’s breast. Star and sky, sea and ship,
automobile and swift travel, gun and war, cyclone and disaster, are
instances of natural and simple association that all people recognize.
In the cultivation, discipline, strengthening of the powers of the
memory, this natural law can be made to render marvelous service.
For not only can man avail himself of faculties of the mind
unconsciously exercised, he has the additional power of consciously
directing their exercise. Just as our domestic water systems are the
result of the conscious direction of the self-flowing water in the
course we wish it to flow, so is the enlarged power of our memories
the result of the conscious and purposeful direction of our
observation, reflection, and thought-linking to that end. Drawn from
personal experience there are five methods of thought-linking which
have proved themselves of great help. These are: First, Incidental.
Second, Accidental. Third, Scientific. Fourth, Pictorial. Fifth,
Constructive.

The Incidental Method

The events, the incidents, of the day occur in a natural order: one
follows another. The days of the week with their respective incidents
follow in natural sequence. A full recognition of this fact is of far
greater help to the memory than one would believe on first thought.
Many a man has been able to recall a particularly important event by
going back, step by step, incident by incident, over the occurrences
of the day. It is related of Thurlow Weed, the eminent statesman,
that, when he entered political life, he had so poor and wretched a
memory that it was his bane. He determined to improve it, and,
realizing the importance of observation and reflection, he decided
upon the following method: As the incidents of the day followed each
other, in natural sequence, he would consciously note how they
followed. Then at the close of the day he sat down with his wife, and
relating the incidents exactly in the order they occurred, he would
review the events of the day, even to the most trivial and
inconsequential act. At other times he would relate the incidental
order backwards. It was not long before his memory so improved
that he began to be noted for it. Before he died, he had the
reputation of possessing a phenomenal memory. One will find this
same method a great help in seeking to recall a sermon, a lecture or
speech. There is a natural sequence in all well-thought-out
addresses, and the listener, carefully noting the change from one
thought to another—the progress of the address—will find it aid his
memory development wonderfully to take the last thought given, say,
and in reverse order, bring up the thoughts, the ideas given. Then let
the address be “incidentally” gone over from the first thought to the
second, the third, and so on to the end. Thus it can be recalled and
put away in the memory securely for future use.

The Accidental Method

Another natural method is what may be termed accidental. It is
purely accidental that Pike’s Peak is 14,147 feet high, but see how
this fact enables you to fix the figures in your mind. There are two
fourteens and the last figure is half of fourteen, namely, seven. It is a
purely accidental fact that the two Emperors of Germany died in
1888, but the fact that they did die in that year, the one year in the
whole century when the three eights occur, indelibly fixes the date in
mind. Again the year 1666 might have passed by unnoticed were it
not for the fact that that was the date of the Great Fire in London.
Now let us see how this accidental association may fix a relative
date for many other important events. The Great Fire purged the city
of London of the horrors caused by the Great Plague. This plague
was made the basis for Eugene Sue’s graphic novel, “The
Wandering Jew.” Wherever he went—so ran the legend—the plague
followed as the result of Christ’s curse. It was the Great Plague that
brought into existence the peculiar custom of all the Latin, as well as
the English, peoples exclaiming, “God bless you!” or its equivalent,
upon hearing one sneeze. The reason for the custom is that
sneezing was one of the first symptoms of the fearful plague, and
one, hearing his friend sneeze, immediately felt afraid he was seized
with the dread disease, and gave vent to this pious exclamation. The
custom persists to this day, but few know its origin. This plague also
brings to mind a noble example of heroism that is worthy of
enshrinement in every heart. It was found by those who watched the
progress of the plague that it went from place to place, dying out
here as soon as it appeared elsewhere. It was this phenomenon that
gave to Eugene Sue the dramatic element in his novel, for it
appeared to the ignorant people of those days that the plague
actually followed the cursed Jew. A country pastor, an humble but
devoted and true servant of God, in a little Derbyshire village, had
observed this fact. Although isolation for contagious diseases was
not thought of by physicians at that time, this man seemed to grasp
the idea. He determined that if ever the disease reached his village
he would endeavor to isolate his people from all others so that it
would stop there and no longer continue to slay its helpless victims.
In due time the plague did appear in his village. He had already
aroused in his simple-minded flock the spirit of true heroism, and
they pledged themselves to second his endeavors. Food was
brought from a near-by town and deposited near a watering-trough,
in which a small stream was continually flowing. In this flowing water
the villagers placed the money in payment for their food supplies.
Thus there was no contact of peoples, no contamination. The
villagers kept to themselves, no one going away and no one coming
in. The result was that in a very short time the plague was stayed,
and Europe breathed a great sigh of relief, attributing its cessation to
the goodness of God, when we now know it was owing to the self-
sacrificing wisdom of men.
But we are not yet through with our associations with the
accidental date of 1666. The most remarkable account we have of
the Great Plague is Daniel DeFoe’s “Journal of the Plague,” which
for many years was regarded as the genuine diary of an eye-
witness. As DeFoe, however, was not born until 1661, five years
before the plague, he could have had but the faintest and most
childish remembrances of that dread event. But it was he who wrote
the world-famous, ever-enjoyable “Robinson Crusoe.” This appeared
in 1719, and, while the association of this date with that of 1666 is
remote, it does approximately fix the date of the appearance of that
masterpiece.
Another literary masterpiece appeared, however, much nearer the
time of the plague. That was John Bunyan’s “Pilgrim’s Progress,”
which was written in Bedford Jail during the actual year of the plague
and fire.
One of the greatest lawyers of England was Sir Matthew Hale, and
it is a help to fix approximately the time he was on the bench when
we recall that it was he who sentenced John Bunyan to the twelve
years’ confinement that gave to the world his “Pilgrim’s Progress.”
On the other hand, Hale was a great personal friend of Richard
Baxter, who, at about the same time, wrote the well known “Saints’
Everlasting Rest.” Here, then, hung on to this accidental peg of the
year 1666, we find the following facts: First, the Great Fire; second,
the Great Plague; third, Eugene Sue’s novel “The Wandering Jew;”
fourth, the custom of saying “God bless you;” fifth, the heroism of the
Derbyshire villagers that stopped the plague; sixth DeFoe’s writing of
the “Journal of the Plague” and “Robinson Crusoe;” seventh,
Bunyan’s writing of “Pilgrim’s Progress;” eighth, Sir Matthew Hale on
the English bench; ninth, Richard Baxter’s writing of the “Saints’
Everlasting Rest.”
Every novelist uses this law of accidental association, for it is
habitually used by every class of people. Who is there who does not
recall certain events because they happened on days when other
and perhaps more important events occurred which fixed the date in
the mind? For instance, if an event occurred on the day of her first
child’s birth, and the mother was aware of it, you may rest fully
assured she would have no trouble recalling the date of the event. Its
accidental association will guarantee its remembrance.
Lawyers use this law constantly in seeking to extract evidences
from their witnesses. The dates of certain events are surely fixed in
the mind. Other events, less securely remembered, occurred at, or
about, the same time. The association once clearly established, the
memory invariably responds.

The Scientific Method

This method is merely a phase of reflection, for during that
process one naturally classifies his ideas, received through
observation. As David Pryde says in his “How to Read”:

See every fact and group of facts as clearly and distinctly

as you can; ascertain the fact in your past experience to
which it bears a likeness or relation, and then associate it with
that fact. And this rule can be applied in almost every case.
Take as an example that most difficult of all efforts, namely,
the beginning of a new study, where all the details are
strange. All that you have to do is to begin with those details
that can be associated with your past experience. In science,
begin with the specimens with which you are already familiar,
and group around them as many other specimens as you can.
In history and geography, commence with the facts relating to
the places and scenes which you actually know. And in
foreign languages, start with the words and phrases for the
most familiar objects and incidents of every-day life. In this
way you will give all your mind a clear and safe foundation in
your own experience.... The mind cannot master many
disconnected details. It becomes perplexed and then
helpless. It must generalize these details. It must arrange
them into groups, according to the three laws of association—
resemblance, contiguity, and cause and effect. This, it will be
granted at once, must be the method in all rigidly systematic
studies, such as the sciences, history, biography, and politics.
But it is valuable to ordinary people as well to know that the
same plan can be used in all kinds of descriptions. Every
collection of details can be arranged in groups in such a way
that they can be clearly understood and remembered. The
following is the manner in which this can be done: In studying
any interesting scene, let your mind look carefully at all the
details. You will then become conscious of one or more
definite effects or strong impressions that have been made
upon you. Discover what these impressions are. Then group
and describe in order the details which tend to produce each
of the impressions. You will then find that you have comprised
in your description all the important details of the scene. As
an instance, let us suppose a writer is out in the country on a
morning toward the end of May, and wishes to describe the
multitudinous objects which delight his senses. First of all, he
ascertains that the general impressions as produced on his
mind by the summer landscape are the ideas of luxuriance,
brightness and joy. He then proceeds to describe in these
groups the details which produce these impressions. He first
takes up the luxuriant features, the springing crops of grain
completely hiding the red soil; the rich, living carpet of grass
and flowers covering the meadows; the hedge-rows on each
side of the way, in their bright summer green; the trees
bending gracefully under the full weight of their foliage; and
the wild plants, those waifs of nature, flourishing everywhere,
smothering the woodland brook, filling up each scar and
crevice in the rock, and making a rich fringe along the side of
every highway and footpath. He then descants upon the
brightness of the landscape; the golden sunshine; the pearly
dew-drops hanging on the tips of every blade of grass, and
sparkling in the morning rays; the clusters of daisies dappling
the pasture-land; the dandelion glowing under the very foot of
the traveler; the chestnut trees, like great candelabra, stuck
all over with white lights, lighting up the woodlands; and lilacs,
laburnums, and hawthorne in full flower, making the farmer’s
garden one mass of variegated blossom. And last of all, he
can dwell upon the joy that is abroad on the face of the earth:
the little birds so full of one feeling that they can only trill it
forth in the same delicious monotone; the lark bounding into
the air, as if eager and quivering to proclaim his joy to the
whole world; the bee humming his satisfaction as he revels
among the flowers; and the myriads of insects floating in the
air and poising and darting with drowsy buzz through the
 floods of golden sunshine. Thus we see that, by this habit of
generalizing, the mind can grasp the details of almost any
scene.
This desire to unify knowledge, to see unity in variety, is
one of the most noted characteristics of great men in all
departures of learning. Scientific men in the present day are
eager to resolve all the phenomena of nature into force or
energy. The history of philosophy, too, is in a great measure,
taken up with attempts to prove that being and knowing are
identical. Emerson can find no better definition of genius than
that it is intellect constructive. Perhaps, he says, if we should
meet Shakspere, we should not be conscious of any great
inferiority, but of a great equality, only that he possesses a
great skill of using—of classifying—his facts, which we
lacked.

Herbert Spencer was a master at the classification of facts. By the

classification of all the known languages of the world, the scientists
are seeking to find out accurately, as never before, the relationships
of mankind. Men have been writing the different languages of widely
diverse people for centuries, but never before has an attempt been
made on so vast a scale to bring all this isolated knowledge to bear
upon the solution of one great question—the origin of the human
race. All scientific knowledge is based upon the association of
isolated and detached facts. These are then reflected upon, and,
finally, theories begin to form themselves in the mind of the student,
the philosopher. He then brings his facts and theories into close
relationship and sees whether they “fit.” If he is assured that they do,
he presents his thought to the world, and, according to its
reasonableness, it is received or rejected.

The Pictorial Method

Most children make mental pictures with great ease, but,
unfortunately, as they grow older, they allow this faculty to lose its
power by disuse. In the cultivation and use of the memory, however,
it can be of the greatest possible help. All books of travel and
description, all novels, all history, are made up of a series of word
pictures. Do not be content merely to read the words of these
pictures. Go further! Actually picture each scene in your imagination
and you will thus materially aid your original power of observation.
Let your pictures be definite, positive, explicit as to details, for the
more careful you are in making a picture real to your mind, the easier
it will be recalled.
Now, if you desire to recall the whole course of a book, you will
find these vividly-made mental pictures have a natural order of
sequence, and one will recall the next following, and so on. There is
great joy in learning to make pictorial thought-links, and then in the
ability they give to the memory to recall them.

Methods of Constructive Thought-Linking

We now come to the active making of artificial links as aids to the
memory where none naturally appear. A thought-link of this type is
the generally known doggerel:

Thirty days hath September,

April, June and November,
All the rest have thirty-one
Save February which alone
[18]Has twenty-eight, and one day more
We add to it one year in four.

In like manner how do we remember the order of the prime colors?

Few there are who do not know the coined word, made from the
initial letters of Violet, Indigo, Blue, Green, Yellow, Orange, Red—
Vibgyor. Again, the student of geology, who forgets the order of his
great epochs or eras, might recall them by formulating a sentence
that presents the initial letters of the names of these epochs. Thus,
“Careful men pay easily,” suggests Cenozoic, Mesozoic, Paleozoic,
Eozoic. Of course no one of common sense presumes to assert that
these constructive thought-links are any other than crutches,
footbridges over streams too wide to stride or jump unaided. They
should frankly be recognized as such, and only reverted to in case of
necessity, or as a last resort. But it is equally foolish in view of the
testimony of their almost universal usage and helpfulness, to deny
that they are an aid to most memories.

Think of the Impressions

To “think of the impressions.” This is the final admonition of
Stokes’s golden rule of memory. One word conveys his idea—
review. The things to be remembered must be thought over. They
must be re-collected—again collected. You will thus re-observe
them, re-reflect upon them, re-strengthen your original mental
impressions and the ideas that have grown around them. Experience
demonstrates that all memory impressions are lasting. One may
have forgotten something for twenty, thirty, forty years, when
suddenly a chance word, sound, sight, or even odor, will recall it with
an intensity and reality that are startling. All works on mental
philosophy give illustrations of this asserted fact. The practical need
of all men, however, is to cultivate the ability to call up mental
impressions at will.
Ready recollection is the great desideratum. Hidden knowledge is
of slight use. It is as if one had a fortune stored away in some hidden
dungeon, carefully locked up, but he had lost the key. Availability,
readiness, promptness are essentials to efficiency. The hat-boy at
the hotel dining-room would be useless did his memory not act
promptly, instantly. To-morrow will not do. Now is the accepted time.
This efficient, prompt, responsive memory is the one you need and
desire. It is worth striving for. The prospector wanders over the
mountains, canyons, deserts, for years, seeking the precious ore in
most unlikely places. He is always buoyed up with the hope, some
day, of striking it rich. Are you as earnest in your desire for memory
development as he? If so, careful, systematic, daily exercise of the
various faculties of the mind and memory will give to you this golden
possession. Reread here what has been quoted earlier from David
Pryde’s “What Books to Read and How to Read.” The hints therein
contained are worth their weight in gold to the really earnest student.
But rest assured of this: If you would have a good memory, you must
work for it. Give your whole attention to whatever you read or hear.
Concentrate. Compare the parts of the composition with the whole.
Seek its excellencies, study its deficiencies. Reflect upon it from
every angle. Write out in your own language the facts, or the ideas of
what you have heard or read. Then use daily what you have gained.
Knowledge stored away in the mind is not only useless, it is
positively injurious. Use is the law of life. Give your knowledge, your
ideas, your reflections away. Tell them to your intimates, your friends.
Write them to your correspondents. For the more you give the more
you will find you have. There is a giving that increases and a
withholding that impoverishes, and in nothing is this more apparent
than in the giving of the riches of the mind or memory. Each time one
recites a well-liked poem for the benefit and blessing of others, the
more firmly he fixes it in his own mind. “There is that which
scattereth, and yet increaseth.” In the scattering of your gems of
mind and heart, you are increasing your own store.
Not only give freely, but give often. The daily use of what you have
gained is an advantage. Avail yourself of every reasonable
opportunity to use your newly acquired powers, and your newly
acquired knowledge. Let me repeat, use is the law of life. To learn
something new daily is a good motto, but to use what you have
learned is even better. You gain ease of recollection by daily
exercising the faculty of recollection. And if your memory balks,
refuses to act, compel it to obey you. If you make a demand upon it
and it fails to respond—you cannot remember—do not let the matter
go by. Demand of the memory that it bring back that which you
require. Keep the need before you.
In this constant, persistent, cheerful, willing use of the memory lies
great happiness and content. “It is more blessed to give than to
receive.” The more, in reason, the athlete uses his muscles the
stronger they become. And think of the radiant joy that is the natural
accompaniment of a healthy, vigorous body. What constant pleasure
is his who calls upon a physical body which readily and willingly
responds! Equally so is it with the memory and all the mind. Activity
keeps it in health. In this glorious condition it readily responds to all
calls, it is radiantly alive, and I know of no joy greater that can be
given to man than that in body, mind, and soul he is a radiating
center of activity, receiving and giving on every hand.
In conclusion, here are a few practical words upon the other side
of the question, on forgetting, for there is a forgetting that is of great
help to the power of remembering. Fix these precepts firmly in your
mind:
Forget evil imaginations.
Forget the slander you have heard.
Forget the meanness of small souls.
Forget the faults of your friends.
Forget the injuries done you by your enemies.
Forget the misunderstandings of yesterday.
Forget all malice, all fault-finding, all injuries, all hardness, all
unlovely and distressing things.
Start out every day with a clean sheet. Remember only the sweet,
beautiful and lovely things, and you will thus be as a human sun of
righteousness, with healing in your rays.
 FOOTNOTES
[1] Entered according to Act of Congress, in the year 1884, by
George Wharton James, in the office of the Librarian of Congress,
at Washington, D. C.
[2] Entered according to Act of Congress, in the year 1885, by
George Wharton James, in the office of the Librarian of Congress,
at Washington, D. C.
[3] Scripture, “Stuttering and Lisping,” p. 3.
[4] Pauline B. Camp, “Correction of Speech Defects in a Public
School System.” “The Quarterly Journal of Public Speaking” for
October, 1917, p. 304.
[5] By contact is meant the point of greatest resistance of the
vocal organs to the column of air.
[6] Lawyer, Senator from Nebraska, 1895—born at Montpelier,
Vt., 1847.
[7] Pronounced “Sombray.”
[8] Adobe, pronounced A-do´by, a thick clay of which sun-dried
bricks are made.
[9] Robert Lloyd was an English poet of the middle eighteenth
century.
[10] This remarkable poem relates to revelry in India at a time
when the English officers serving in that country were being
struck down by pestilence. It has been correctly styled “the very
poetry of military despair.”
[11] Some of the greatest literature of this war has been written
by British Tommies—in the trenches or in hospitals; but nothing
finer or better interpreting the psychology of the men at the front
has yet appeared in print than this poem by Bombardier B.
Bumpas, of the Australian contingent, wounded at Gallipoli and
while convalescing in a hospital at Cairo, minus a leg and an eye.
[12] From “Madrigali.”
 [13] From Hiawatha.
[14] Mr. Miller gives the following interesting note to the above
poem:
“We had been moving West and West from my birth, at Liberty,
Union County, Indiana, November 10, 1841 or 1842 (the Bible
was burned and we don’t know which year), and now were in the
woods of the Miami Indian Reserve. My first recollection is of
starting up from the trundle-bed with my two little brothers and
looking out one night at father and mother at work burning brush-
heaps, which threw a lurid flare against the greased paper
window. Late that autumn I was measured for my first shoes, and
Papa led me to his school. Then a strange old woman came, and
there was mystery and a smell of mint, and one night, as we three
little ones were hurried away through the woods to a neighbor’s,
she was very cross. We three came back alone in the cold, early
morning. There was a little snow, rabbit tracks in the trail, and
some quail ran hastily from cover to cover. We three little ones
were all alone and silent, so silent. We knew nothing, nothing at
all, and yet we knew, intuitively, all; but truly the divine mystery of
mother nature, God’s relegation of His last great work to woman,
her partnership with Him in creation—not one of us had ever
dreamed of. Yet we three little lads huddled up in a knot near the
ice-hung eaves of the log cabin outside the corner where
mother’s bed stood and—did the new baby hear her silent and
awed little brothers? Did she feel them, outside there, huddled
close together in the cold and snow, listening, listening? For lo! a
little baby cry came through the cabin wall; and then we all rushed
around the corner of the cabin, jerked the latch and all three in a
heap tumbled up into the bed and peered down into the little pink
face against mother’s breast. Gentle, gentle, how more than ever
gentle were we all six now in that little log cabin. Papa doing
everything so gently, saying nothing, only doing, doing. And ever
so and always toward the West, till 1852, when he had touched
the sea of seas, and could go no farther. And so gentle always!
Can you conceive how gentle? Seventy-two years he led and
lived in the wilderness and yet never fired or even laid hand to a
gun.”
[15] There is a Scandinavian legend that Siegfried, the “Viking,”
feeling that he was at the point of death, caused himself to be
placed on the deck of his ship; the sails were hoisted, the vessel
set on fire, and in this manner he drifted out to sea, alone, and
finished his career.
[16] In the “days of old, the days of gold, and the days of ’49,”
water was brought from the Sierran heights in wooden viaducts,
or “flumes,” to be used in the mines. The fifth stanza refers to the
process of hydraulic mining, where the water, projected through
huge nozzles (somewhat after the fashion used by fire-engines),
washed down the mountain-sides into the sluice-boxes where the
dirt was washed away and the gold retained. Now the flume’s
waters are mainly diverted to purposes of irrigation.
[17] “‘The Arrow and the Song’ came into my mind and glanced
on to the paper with an arrow’s speed—literally an improvisation,”
said Longfellow. The poem has been exceedingly popular, both
when recited and also when sung to the beautiful music
composed for it by the Italian song-writer, Ciro Pinsuti.
[18] Here is a variant of the last two lines:

“Has twenty-eight and this in fine

One year in four has twenty-nine.”
 INDEX
All titles to chapters are in capitals.
All titles to selections are in italics.
Names of authors are given in ordinary type.

A
Abraham Lincoln Walks at Midnight, 520
Adams, Charles F., 338, 393
Advance, The Great, 534
Adventure, A Startling, 150
” An Unexpected, 258
AFTER DINNER SPEAKING, 711
Ain’t It the Truth (exercise), 35
Aldrich, Thomas B., 490, 665
All in the Emphasis, 311
Alexander, S. J., 641, 642, 643
Alexandra, A Welcome to, 633
Americanism, Creed of, 677
America and Its Flag, 559
” Music of, 21
Analysis, Progressive, 112
Ancient Mariner, 49
Andersen, Hans C., 191
Anderson, Alexander, 427
” John, My Jo, 574
Annabel Lee, 430
” The Lover of, 431
Apostrophe to the Ocean, 536
Apple Blossoms, 588
Arena, A Combat in the, 272
Arrow and the Song, The, 630
ARTICULATION EXERCISES, 27 et seq.
As I Came Down from Lebanon, 587
Aspirates, 28
As You Like It (quoted), 658-59
At Grandma’s, 391
Authors, Study Great, 2
Author’s Thought, Getting the, 7

B
Baby, Rocking the, 434
Bacon, Francis, 49
Bad Night, A, 131
Ballad of the King’s Singer, The True, 498
Banishment Scene, 662
Bansman, William, 538
Barnes, W. H. L., 683
Barrett, Wilson, 187
Bashford, Herbert, 414, 416, 456, 460, 612, 624
Battle Field, The Children of the, 452
Beecher, Henry Ward, iv, 100
Belief, Author’s Purpose, 113
Bedford-Jones, H., 337
Bell Buoy, The, 70
Bells of San Gabriel, 631
” of Shandon, 636
” The Minaret, 621
Bennett, Henry Holcomb, 525
Beside the Dead, 433
Betty Botter, 30
Bill and His Billboard, 35
Billee, Little, 360
Bishop and the Convict, The, 220
Bishop, Justin Truitt, 142
Black Sailor’s Chanty, The, 408
Blacksmith of Limerick, The, 503
Bland, Henry Meade, 568
Blossom Time, In, 607
Blossoms, Apple, 588
Booth, Gov. Newton, 678
Boy Wanted, A, 285
” The Whistling, 358
Bosher, Kate Langley, 132
Bravest Battle, The, 519
Break! Break! Break!, 433
Breath Sounds, 28
Brook and the Wave, The, 590
Brook, Song of the, 603
Brooks, Fred Emerson, 331, 343, 345, 348, 357, 358, 385, 408,
481
Brookside, The, 579
Brotherhood, 540
Browne, J. Ross, 131, 146, 150, 245
Browning, Elizabeth, 19, 442, 539, 542
Browning, Robert, 57, 63, 64, 66, 99, 304, 305, 321, 429, 548,
627
Brother, Little, 177
Brown Wolf, 183
Bryant, William Cullen, 53
Bullets, The Song of the, 644
Bumpas, Bombardier B., 423
Bunner, Henry C., 336
Burdette, Robert, 24, 148, 157, 158
Buried Heart, The, 434
Burns, Robert, 547, 574, 617
Butterfly, To a February, 642
Byron, Lord, 536

C
Cable, George W., 204
California, 606
Camp-Meeting at Bluff Springs, 142
Camp, Pauline B., 76
Captain, O, My Captain, 171
Carleton, Will, 507
Carmichael, Sarah B., 67, 453
Carruth, W. H., 469
Cary, Alice, 334, 609
Castles, Irish, 344
Catacombs of Palermo, 146
Cavalier’s Song, The, 473
Cave, The Tiger’s, 239
Champlain, Legend of Lake, 207
Channing’s Symphony, 324
Chapman, Arthur, 587
Charge, Pickett’s, 481
Charlie Jones’s Bad Luck, 412
Cheney, Annie Elizabeth, 600, 606
Chesterfield, Lord, 27
Child, R. W., 250
Child of My Heart, 613
Child’s Almanac, A, 392
Children of the Battlefield, The, 452
Chip of the Old Block, A, 193
Christmas at Sea, 510
” in India, 634
” Present for a Lady, A, 137
Christmas Ring, The, 348
Cicely, 332
Clarence, The Dream of, 501
Clark, James Gowdy, 452, 594
Classification of Selections, 113
Clearness and Precision in Speech, 85 et seq.
Clearness of Thought, 113
Coleridge, S. T., 49
Colloquial Selections, 327 et seq.
Colum, Padraic, 616
Columbus, by Joaquin Miller, 626
” Analysis of, 105
” by A. H. Clough, 340
Combat in the Arena, A, 272
Combination Sounds, 29
Co’n Pone’s Hot, When the, 397
Conversational Style, 672
Convict, The Bishop and the, 220
Cooke, Edmund Vance, 396, 404
Coolbrith, Ina, 433, 535, 538, 604, 605, 607
Cooper, Peter, 585
Copper Sin, A Son of, 262
Cornwall, Barry, 533
Coronation, 521
Correct Speech, 12
Corson, Hiram, 97, 101