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Monday, March 28, 2011

The New Multinationals: perspectives from Spain

The popular model of MNC's global expansion vertically and horizontally is well document.For horizontal expansion, technology and brands are considered pre-requisites. The raise of multinationals from developing nations like India puzzled many. In this book Mauro F. Guille´n and Esteban Garc─▒´a-Canal , develop a new theory of enablers for new MNCs. The examples were mostly Spanish but might be valid for Indian MNCs too.
The new multinationals from the BRIC countries have made great inroads into the global economy. Among Brazilian firms, Companhia Vale do Rio Doce and Metalu´rgica Gerdau are among the largest firms in mining and steel, Embraer holds with Bombardier of Canada a duopoly in the global regional jet market, and Natura Cosme´ticos has a presence in both Latin America and Europe. Lukoil, Gazprom, and Severstal are among the Russian multinationals, while India boasts an army of firms not only in IT and outsourcing services, in which companies such as Infosys, TCS, and Wipro are among the largest in the world, but also in steel, automobiles, and pharmaceuticals. Chinese firms have erupted with force in global markets not only as exporters but also as foreign investors, and in every industry from mining and oil to chemicals and steel. In electrical appliances and electronics, China boasts three increasingly well-known firms: Haier, Lenovo,and Huawei.
International expansion for new MNCs has become possible due to unique capabilities developed by them in their home country in less than perfect conditions.The process of resource accumulation is dependent on home country characteristics such as:
1. infrastructure gaps created opportunities leading to project execution capabilities- Bharati Telecom, GMR Airports, Adani shipyards.
2. Managing suffocating regulations and red tape became a source of competitive advantage as firms learn to leverage previliged political connection.- Reliance
3. Managing fragmented and relatively low capacities at home made the new MNCs masters in turning around under performing firms in foreign countries- Birla empire. 
4. meeting unconventional needs at home developed expertise in specific niches carried to global niches- pharma generics,frugal innovations. 
5. joint ventures and technology transfer arrangements upgraded engineering skills- Tata Motors. 
6. working with Fortune 500 firms resulted in reputation- IT giants.


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