Finance chiefs, by their nature, rarely need to be reminded that, "If it sounds too good to be true, it probably is." But with domestic demand sluggish at best, many are looking to overseas markets for growth, and there is a marked tendency to put on rose-colored glasses when doing so.

Of course, the BRICs (Brazil, Russia, India, and China) and even the CIVETSs (Colombia, Indonesia, Vietnam, Egypt, Turkey, and South Africa) might not be as exotic as they once were. Nonetheless, who isn't bedazzled by the growth stories being reported from these developing countries?

It's not just that many of these countries survived the recession more or less unscathed and are back on growth trajectories that most developed markets can only dream of. According to many predictions, collectively they may soon eclipse today's developed countries. Anil K. Gupta, professor of strategy at Insead business school in Singapore and co-author of Getting China and India Right (Jossey-Bass/Wiley, 2009), says that at current market exchange rates, emerging markets, which account for just over 25% of global GDP today, will increase that share to more than 50% in 15 years.

Many, if not all, companies understand what that means for them. Gupta recalls that at a recent conference in Shanghai, the CEO of a global advertising company said that the big emerging markets "are like the Premier League, [and] if we don't win those markets, the rest doesn't matter." Or, as Gupta himself puts it, "The goal isn't just to be there; the goal is to be there and win."

But what role does the CFO play in helping a company win? Increasingly a strategic one, both in terms of sounding a note of caution and determining how to forge ahead.

"It always strikes me that when companies think about expanding abroad, they almost always look only at market characteristics — the number of customers and so on," says Freek Vermeulen, assistant professor of strategic and international management at London Business School. "Yes, it can be very nice that there are lots of customers [in those markets] with money to spare, but you need to start the other way around and look at internal stuff and ask, 'What are we good at, and will our competitive advantage work in an emerging market?' If the answer is no, don't go."

But if the answer is yes, a big job lies ahead for the CFO — to begin challenging the old assumptions that the company has long held about these new markets.

More Different Than Similar
One such assumption is that a company needs only two strategies, one for home and one that lumps the rest of the world into a single "international" group.

On paper, having just one international plan seems sensible, particularly from the standpoint of efficiency and clarity. But it oversimplifies. Fast-moving consumer-goods multinationals, such as Kraft, Unilever, and Procter & Gamble, figured that out years ago and now spend millions developing, country by country, localized products, packaging, and prices to gain market share in tough countries like India.

Now other companies are doing the same. "We've learned that all of our customers are more different than similar," says Kyle Gendreau, CFO of Samsonite, the privately held U.S. luggage company. He says Asia — not only Japan, but also emerging markets in the region like China and India — will not simply drive Samsonite's growth but "have the potential to double our revenue in the next five years."

A key to growth, says Gendreau, is that the company decided two years ago to abandon its centralized global philosophy and "empower" country general managers, allowing them, for example, to develop marketing and distribution strategies "to push the products" as they see fit, versus relying on corporate headquarters to dictate the plan. "Letting people be entrepreneurial on the ground drives growth," he says. "It's really paying off for us."

Another practice that requires a rethink: determining exactly where the best markets are. For example, Mike Devine, CFO of Coach, the $3.3 billion, New York–based handbag and accessories company, says that while China's megacities, including Beijing and Shanghai, have helped Coach's sales double year on year (to $100 million in fiscal 2010), the company is now also increasingly focusing on the country's relatively smaller "tier-two" and "tier-three" cities. Those cities, which include Chongqing and Dalian, are home to a large portion of the country's new middle-class and will be attracting many of the 300 million rural Chinese expected to migrate to towns and cities in the next 10 years.

They are also home to many of Coach's 75 million target customers (urban men and women born after 1966 who earn at least $10,000 a year, a consumer population that will increase to more than 200 million in the next five years). Of the 25 Coach stores being opened in China during the current fiscal year ending in June, Devine says only a "handful" will be in the biggest cities, while the majority will be in the tier-two cities, with "tweaked" marketing and product strategies to appeal to local shoppers.

This universe of fast-growing cities is expanding quickly. A recent report from Boston Consulting Group identified 717 cities around the world with populations of more than 500,000, and noted that another 371 such cities will reach this size by 2030. Among them are Ahmedabad, India; Curitiba, Brazil; and Jakarta, Indonesia. By 2015, these cities will account for 30% of global private consumption, which is growing 11% annually.

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