Professor : Belmiro N. João

Aluna: Erlana Castro

Mestrado PUC SP

Fev 09

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ABSTRACT

•Conventional wisdom says that companies from the periphery of the global market can't compete against established global giants from Europe, Japan, and the United States. Companies from developing countries have entered the game too late; they don't have the resources.

•But Christopher Bartlett and Sumantra Ghoshal disagree. The problem for most aspiring multinationals from peripheral countries, say the authors, is that they enter the global marketplace in low-margin businesses at the bottom of the value curve, and they stay there. But it doesn't have to be that way.

•They studied 12 emerging multinationals based in such countries--from emerging markets like Brazil to relatively more prosperous yet still peripheral nations like Australia to developing countries like the Philippines.

•These companies now enjoy global success because they treated global competition as an opportunity to build capabilities and move into more profitable segments of their industry. The path to globalization isn't easy, but the authors show that it is possible.

•Each company in the study overcame the same core challenges. They broke out of the mind-set that they were unable to compete successfully on the global stage. They adopted strategies that made being a late mover a source of competitive advantage. They developed a culture of continual cross-border learning. And they all had leaders who drove them relentlessly up the value curve.

•The companies discussed in this article are models for the thousands of marginal companies in peripheral economies that have the potential to become legitimate global players.

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Consider labels such as Made in Brazil or Thailand

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Someday they will be symbols of high quality and value, but today

many consumers expect products from these countries to

be inferior. There’s a huge prejudice on value perception.Consider labels such as Made in Brazil or

Thailand

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“We foresee ample opportunity in brands and fabrics and will innovate the profitable portfolio by introducing functional, protective and performance fabrics”.

“The ratio of domestic to foreign business for the company is currently 50:50, which will become 65:35 in the next few years, however, it doesn’t mean that the domestic business will decrease. The international business will grow too”.

Mr Sanjay Lalbhai, CMD, Arvind Ltd, at the unveiling of the company’s new logo in Mumbai on Monday.

Our Bureau Mr Sanjay Lalbhai, CMD, Arvind Ltd, at the unveiling of the company’s new logo in Mumbai on Monday.

Our Bureau

Mr Sanjay Lalbhai, CMD, Arvind LtdMay, 2008

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An old history

The moral is consistently

negative;

Companies from developing

countries have entered the game

too late in the global

marketplace;

They don’ t have the resources;

They can’ t hope to compete against

giants

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Companies like Sony, Toyota, and NEC transformed the cheap, low-quality image of Japanese products in little more than a decade.

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An Indian pharmaceutical company

Parvinder Singh, CEO Enters in global market in

1975 (exports) Was trapped at the bottom

of the pharmaceutical value curve

In 1993, Ranbaxy’s approach to internationalization changed fundamentally

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“Rambaxy cannot change India. What it can do is to create a pocket of excellence. Rambaxy must be na island within India”.

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Breaking Out of the Marginal Mind-Set• Psychological factors that

hold back most companies and the ways our emerging multinationals dealt with them.

• Liabilities of origin• Companies with

competitive products but... • Prison of local standards• Gap between technical

requirements and design norms at home and world-class standards abroad

• Limited exposure to global competition, leaving them overconfident in their abilities or blind to potential dangers.

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• Moment of truth (shock of recognition) • The companies that are so blinded by their domestic success. Ex. Samsung USA

• Leap of faith• Ex: Thermax, an Indian manufacturer of small boilers. Meet the highest international

technical standards but also had to develop a fundamentally different design concept.

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Pushes from home are indispensable, but if companies are to use international expansion to move up the value curve, they also need to invest in the management capabilities of their overseas units to provide pull from abroad.

Once freed from its domestic markets the next major challenge for a emerging MNC is to choose a strategy to enter the global marketplace. Benchmark and sidestep Confront and Challenge16

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Protect the past Ex: Jollibee

Exploit the resources and capabilitiesclose cooperation between the parent company and its overseas subsidiaries establishes a dynamic of mutual learning

Build the future Ex: VIP Industries. India’s

largest luggage company. versus Sansonite

Success key = leaders Commitment to global

entrepreneurialism was rooted in an unshakable belief that their company would succeed internationally.Ex: Ranbaxy – CEO: Parvinder Singh

Openness to new ideas that would facilitate internationalismEx: ResMed – CEO: Dr. Peter Farrell

Professor : Belmiro N. João

Aluna: Erlana Castro

Mestrado PUC SP

Fev 09