Internationalisation of Emerging Market Firms Flashcards Preview

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Flashcards in Internationalisation of Emerging Market Firms Deck (19)
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1

Why are domestic firms typically more successful than MNEs in EMs?

- Local knowledge
- Customisation of products and business models
- Government protection of small business

2

How have EMCs grown
in different economies (1999-2008)?

- EMCs grew 18% domestically compared to MNEs 8% in EMs
- 22% in advanced economies compared to 12%
- 31% in foreign EMs compared to 13%
E.g Positivo holds greatest market share (Brazilian company) in PC market

3

What are the strengths of EM firms?

- Void/chaotic environment experience
- Political knowledge and expertise
- Strong networking capabilities
- Early movers on home turf
- Strategic and organisational flexibility

4

What are the weaknesses of EM firms?

- Limited technological and managerial capabilities
- Inefficiency - weak competition
- Low scale economies
- Limited access to market intelligence

5

What are the types of emerging market MNEs?

World stage aspirant (international diversification broad, private ownership)

Niche entrepreneur
(international diversification narrow, private owned)

Commissioned specialist (narrow international diversification, state owned)

Transnational agent
(broad international diversification, state owned)

6

How have emerging market firms grown?

- Gov capital and financing e.g One Belt One Road - fdi help from Chinese gov
- Economic growth
- Globalisation: market access, competition
- Exporting into neighbouring countries: new skills
- Offshoring of production: JVs with developed firms

7

Why do EM firms internationalise?

- Profit
- Market seeking: population, sales growth
- Reverse innovation: take products to advanced markets
- Outgrown domestic market
- Resources - cheaper inputs
- Market protection
- Bypass restrictions: avoid tariffs, quotas
- Escape domestic voids and constraints, diversification

8

What is the LLL framework in terms of EM firm internationalisation?

Linkage - ability to build network relationships, possibilities for resource linkages, JVs

Leverage - unique capabilities, creative packaging, business models to overcome voids, skills to serve BOP

Learning - learn knew skills

9

What are some examples of EM firms and where do they come from?

Nandos, Huawei, Petrobras, Alibaba

61/88 EM fortune global 500 firms (2011) Chinese

10

How do EM firms fights MNEs?

Strategies depend on:
- Globalisation pressure in the industry - to compete at global level or to localise products
- Transferability of company's assets abroad: knowledge and capabilities

11

What are the distinctive capabilities of EM firms?

- Ability to customise products and services - capability of modifying performance to price relationships

- Capability of developing business models that overcome bottlenecks - process innovation capabilities

12

What are the four strategies to compete with MNEs?

Dodge - sell off, enter a JV, complements or niche products (avoid head on collision)

Defend - use local advantage to focus on aspects where MNEs are weak

Contenders - upgrade capabilities to compete with MNEs

Extend - internationalise into similar markets

13

What are the different entry strategies for EMs in advanced markets and why is it difficult to replicate business models?

- Easier to expand to EMs as can replicate business model e.g acquisition
- Greenfield typically needed for advanced markets, adaptation
- Low price an advantage when competing against MNEs

14

How is Tata a good example of a high growth EMC?

- Ability to identify and manage talent amid IVs
- Exploits high quality and low cost Indian technical talent
- Replicated model in other developing markets
- Trained local employees in India or brought in employees from India

15

What are the pros and cons of greenfield?

Pros - fresh start, cheaper

Cons - slow, retaliatory behaviour, liability of foreignness

16

What are the pros and cons of brownfield?

Pros - established market share, reputation, labour, relationships. Quick

Cons - expense, integration issues

17

What are country of origin effects?

Good/bad EM reputations impacts perception in foreign markets

18

What are the benefits of being listed in advanced markets?

Listing in overseas advanced markets reduces costs of raising capital in under developed markets
- Signals good corporate governance
- Helps attract customers
- Quality signal

2014 - 119 African companies listed on LSE

19

What are the challenges to EM firms of going global?

- Poor fit business models
- Culture clashes
- Legitimacy problems
- Knowledge gaps - lack of ownership advantages
- Espionage and security concerns
- Economic competition - restrictions on FDI
- Late comers