Companies and enterprises have established operations beyond national borders. This condition has heightened competition in the global markets. Using Arvind Mills from India as an example, Bartlett and Ghoshal point out that companies from developed countries dominate the global markets thus making it hard for companies from developing companies to compete effectively.
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This situation has sparked a lot of debates in the management circles as to what could be the possible reasons behind it. The authors suggest that these companies have little resources and have entered the markets too late.
Whereas companies from developed countries such as Toyota, Sony, and NEC have managed to prosper in the international markets, enterprises from developing countries have failed. These companies are doing well in developed countries and this is supported by the value curve.
Well established companies do well in profitable segments simply because they have sufficient resources to pursue research and development and expand their distribution and marketing networks.
The managers of most multinationals from emerging economies believe that they are inferior hence cannot clinch at the higher-value segments in the international markets.
Model to Success
In an attempt to expand the model of success, the authors used Ranbaxy Pharmaceutical Company from India. This company opted to expand its operations beyond national borders. However, they achieved little for almost two decades.
The approach adopted by a company influences the extent of success in the global markets. When Parvinder Singh assumed the post of CEO at Ranbaxy, he strived to change the business approach to be used in the international markets. The CEO believed that the company could compete with giants from the West only by investing in R&D. Within 5 years, the company had succeeded in the US and European markets. It was operating in the upper regions of the pharmaceutical value curve.
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The success of Ranbaxy has formed a foundation for ascertaining the right ways of entering the global markets which have been dominated by the giants from Europe and the USA.
Breaking out of the Marginal Mind-Set
The failure of companies from emerging economies is attributed to various psychological factors. Firstly, most managers believe that they do not have sufficient technical skills that can help them do well in international markets. Secondly, managers fail to capitalize on their potentials in the markets. Thirdly, the managers feel inferior in the international markets because of their origins.
To succeed in these markets, companies have adopted push from home and pull from abroad approaches. Push from home strategy involves discovering background-related barriers that undermine their success in the international markets. Consumers in the international markets have negative perceptions towards the products and services of multinational companies from emerging nations. Samsung encountered numerous problems when it entered international markets. However, the company decided to come up with products with unique designs.
Pull from abroad is another approach that has been adopted by companies from emerging markets to succeed in the international markets. This requires a company to improve its management capabilities for units in the international markets. Therefore, organizations should employ managers who are conversant with the markets.
Devising Strategies for Late Movers
Late movers in the global markets often face stiff competition from early entrants. In recent days, companies have learned many things about foreign markets from companies that have ventured into domestic markets. This strategy was adopted by Jollibee Company. The authors describe this as a benchmark and sidestep strategy.
Companies should innovate ways used by foreign firms in their domestic markets when venturing markets abroad. The authors suggest that businesses can succeed in the international markets by devising new business techniques that have a far-reaching effect on already established rules of competition in the global markets. This strategy is referred to as confront and challenge.
Learning How to Learn
Businesses are pursuing expansions outside domestic markets purposely to access more customers and cheap labor. To succeed in such ventures, organizational management ought to learn to acquire sufficient information about the market place.
When venturing into international markets, companies must strive to protect the past while building the future. Protecting the past entails utilizing the available resources that have helped the company compete well in the domestic markets. On the other hand, building the future involves modifying the products and management capabilities to suit the new environment.
Having the right leaders and resources
Most companies from emerging economies have failed to overcome barriers related to their backgrounds because of their inabilities to the managers to determine liabilities and capture the right information about the global markets.
Multinationals from developing countries should embrace good leadership teams comprising of individuals who are committed to excellence in the global markets. The leaders should believe in they can thrive well in the international markets.
These companies should have leaders who are willing to embrace new ideas and ready to confront with vast challenges they may encounter.
Companies from emerging economies have failed in the international markets simply because of a lack of resources and proper strategies. To achieve the intended objectives, a business firm must have sufficient resources and the right management team.