The rise of emerging markets from emerging economies has experienced its share of global attention, during the recent past. Many scholars, politicians, especially from developed economies, have had a lot to say, in regards to the growing economic multinationals in the world. Brazil’s Embracer, India’s Infosys and China’s Neusoft are companies that have emerged from these thriving economies and taken over the global market. Is this threat to the developed multinationals? Or are such companies’ catalysts in the growth and development of the global economy? Some scholars have argued that emerging markets provide a bridge between developing economies and large economies, by advancing responsible business practices gained from developed markets to stir growth and development.
Some scholars have assumed the opposing side, terming emerging markets as mere copycats of the already established giant multinationals. By evaluating the core resources and capabilities of emerging markets, the paper will describe what propels emerging markets and the relationship between emerging and developed multinational companies in the world (Ramamurti, 2012). The writer is expected to give a full account of the strengths of emerging markets and describe different means of achieving growth and development without depending on developed markets.
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Discussion
Emerging Multinationals are global companies that are originating from developing economies such as Brazil, South Africa, India and the people’s Republic of China. They are global enterprises that have achieved global excellence through the process of extraordinary leadership and innovative approaches to traditional problems rooted in their economies. The question behind the core resources and capabilities of emerging multinationals lies behind the approach to practice, policy and research. To understand the core resources propelling emerging economies, it is important to note that these corporations emerge from developing economies. As one would assume, tradition has it that the giant multinationals like Apple and Sony have a great deal of rich stocks of proprietary as well as intangible assets accompanied by years of brand experience.
Ownership of intangible assets gives the company a competitive advantage in regards to, the transaction costs of transfer across borders. However, emerging companies have exhibited signs of adaptation as a robust strategy to growing and expanding globally. According to the Global Agenda of 2011-2012 report, among the major issues pushed for is the challenge of youth employment (Azmeh S, 2014). Developing economies have utilized available resources in regards to labor, which has boosted the terms of production at a very low cost of production. Emerging multinationals, like the People’s Republic of China, have utilized the large population to its advantage by acquiring labor at a lower price. Emerging multinationals have invested in developing and internalizing the available talent present in these economies, both locally and internationally (Yadong Luo, 2011). Research has argued that the legacy of their birthrate has provided a competitive advantage leaning towards emerging multinationals.
Emerging markets have developed and spread their wings to assume the share of the market once held by giant multinationals. Regardless of an already established link of years of experience and brand trust companies like Huawei have built their subsidiaries overseas, both in the developing and the developed world. One would go further to argue that just as students emerging markets have had their share of learning experience from the giant multinationals that have dominated for countless of decades. Emerging markets hold the best position in learning and applying valuable information learned from their giant fathers (Sinkovics, 2014). The learning process goes on to cover the understanding and watchful learning of the mistakes that giant multinationals have done in their way to dominating the global economy.
With an open market and identification of new markets, emerging markets have the platform to forge products and innovations using means that would ensure development and global expansion for them. Through the process of consistent learning practices and research, emerging multinationals have developed their means to innovation producing products that are pocket-friendly to the consumer at a low cost of production. According to the United Nations Conference on World Trade and Development Investment report, twenty-five percent of the foreign global direct investment in 2010, emerged from emerging markets (Sinkovics, 2014). Significantly these foreign profits originate from six of the developing countries in the world. It is amusing that developing markets have established their subsidiaries abroad, example Huawei; currently, the second-largest supplier of telecoms equipment by revenue is recorded to have operations in over 140 countries. Having a center of specified countries to base its research in understanding the global market, research would state that emerging multinationals learn from the best.
Core resources that fuel multinationals from developed economies are solely based on the trust created between the people and the company over the long years of experience. Primary resources that contribute to the growth and development of multinationals firms from developed countries are the amount of experience that these companies have achieved. The amount of experience has helped build the brand together with loyal consumers that would die for these products regardless of the price. Do companies want to become the next Apple, why? As a result of the set standard of products, these companies have invested much in research and high-tech innovation to improve the world. One would argue that Apple does not address the cost of production or the prices of the products as a factor but rather the quality and significance of the products innovated.
With large amounts of capital to invest in, companies from developed economies have a strong foundation that allows them to invest in other developed or undeveloped countries. Moreover, multinational corporations have expanded and established subsidiaries in different countries around the world giving them a substantial global expansion. With the years of experience, these companies have developed trust with the globe, thus earning both revenue and expertise of the world market (V. Govindarajan, 2011). Multinational enterprises from developed economies have dominated the world market over the years, their social responsibility past and social relationship in the globe gives them an upper competitive advantage in strategizing for competition.
Emerging multinational companies may at times exceedingly copy paste strategies that violate the intellectual property rights of their rivals in developed economies. As a leader of an emerging company, it is important to foster research as an important means of understanding such strategies. A strategy used by another company may not directly work if employed by another corporation; also the company could be sued as far as intellectual, legal rights are concerned. A manager should ensure that the organization engages in deep research of the strategies to development, ample research will develop learning skills that allow the company to emerge as a sole entity on its own.
Conclusion
The rivalry between companies from developed and emerging economies has shaken the global market to a right turn. Although multinational companies from developed countries view it as competition, it would be accurate to term it growth and development of the global market. Consumer needs are diverse and dynamic; thereby all multinational corporations should engage in deep research and commitment in identifying innovations and strategies that would change the world. Emerging companies should learn from giant multinational corporations not copy and paste their policy. Large multinationals like Sony, Apple, and Coca-Cola, made it through hard work and strategy, so should emerging companies.
References
Azmeh S, N. K. (2014). Asian firms and the restructuring of Global Value Chains. International Business Review , 708-717.
Peter J. Wiliamson, R. R. (2016). The Competitive Advantage of Emerging Market Multinationals. Cambridge: Cambridge University Press.
Ramamurti, R. (2012). What is really different about emerging market Multinationals. Global Strategy Journal , 41-47.
Raveendar Chittor, M. S. (2009). Third-world Copy cats to Emrging Multinationals. Organization Science , 187-205.
Sinkovics, Y. M. (2014). Rising Powers from Emerging Markets: The Changing face of International Business. International business review , 675-79.
V. Govindarajan, R. R. (2011). Reverse Innovation, Emerging Markests and Global Strategy. Global Strategy Journal , 191-205.
Yadong Luo, J. S. (2011). Emerging Economy Copycats: Capability, Enviroment and startegy. Academic of Management Percepectives , 37-56.
