Emerging Multinationals (EMNE's) and Internationalization

ABSTRACT

The emerging markets are those which are facing a phase of growth and development in the economy. There is a huge potential in the market and there are some factors behind it like availability of cheap labor and other resources available for the production of goods and services. The multinationals from emerging markets are those which are now entering in the foreign markets and in order to do business internationally.On the other hand multinational from developed countries are those which already exist in the international markets since long. They are quite mature and doing business since last few decades. Their financial position and technical background is very strong.The competitive edge for the emerging market multinationals is those which are available due to the availability of cheap labor and the natural resources available to them. This makes their products low cost and can compete with the products offered by multinationals from the developed nations. The economic activity which is carried out by the EMNEs is contributing to the domestic countries where they originate from and also they contribute to the economy of the international market.The need for internationalization is because they want to expand and there can be saturation in the domestic market or they produce the seasonal goods which are in demand in particular season in their domestic market and not in other seasons but they may be required by other countries. There can be multiple reasons why they internationalize and various strategies are available. There is a variety of entry modes which they can adopt to enter the market which they are thinking to adopt or which is feasible for them to adopt.

Table of Contents

ABSTRACT2

Introduction5

Discussion7

How Do They Internationalize6

The Stage Approach6

The Theory of Product Life Cycle7

The International Model of Uppsala9

The Global Approach10

Cost leaders12

Knowledge Leader13

Reasons Why Companies Internationalize14

Proactive Motives15

Growth in Profit through increased sales15

Managerial Motives15

Foreign Market Opportunities16

Economies of Scale16

Tax Benefits16

Reactive Motives17

Competitive Pressures17

Domestic Market: Small and Saturated17

Overproduction/Excess Capacity18

Unsolicited Foreign Orders…………………………………………………………....18

Increased Sales of Seasonal Products18

Proximity to International Customers/Psychological Distance18

Comparison between MNC and EMNC19

Multinationals from Developed Countries19

The Emerging Markets Multinationals20

Strategies for success22

Conclusion23

References24



Emerging Multinationals (eMNE's) and Internationalization

Introduction

The world of business which was segmented at a time is now transforming into a global entity. As the growth of the local market slows down, or the firm looks for natural resources or intellectual property or the strategic advantage, companies then do look for the international opportunities where it can grow in the global market.

Over the period of last few years, the increasing number of the Emerging Multinationals from Emerging Markets on the international stage is changing the dynamics of the global trade and its landscape has been transformed. There are companies from India, Russia, Mexico, South Africa, China and Brazil that are establishing themselves rapidly as dominating corporate players. While triad from developed countries stay the main source of the OFDI (outward foreign direct investment) today, the outward funds from the emerging and developing economies have dramatically increased, just from a amount which was negligible in the early of 1980s to ...