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To contribute to our knowledge of the capabilities that are perceived as strategic by emerging market firms, this chapter presents a study of eight Chinese companies with different internationalization levels. They includes two exporters, the high-tech bus manufacturer Higer and the low-tech manufacturer of car seats Baby First. We also examine high-tech multinationals AVIC (aviation), Advantech (computer systems), and ShangGong Group (industrial sewing machines), in addition to low-tech Chervon (hand-held outdoor tools) and Siwei-Johnson (specialized vehicles). Finally, we examine retail service firm Sanpower. By examining and comparing/contrasting the capabilities identified as strategic by these companies, we aim to gain insights into strategic capability development based on the experience of the world’s largest emerging economy. For example, more than one company mentioned their reflection capabilities, a cognitive process where people attempt to increase their awareness and learn from past business experiences, and explained how they apply this mechanism to corporate governance.
Through development of strong strategic capabilities, Chilean companies have increased their foreign presence over the last three decades. Two critical factors influenced this drive to internationalization: (1) limited potential to grow domestically due to the relatively small size of the Chilean economy, and (2) the early start of Chile’s liberalization process compared to other Latin American countries. In this chapter, we examine the strategic capabilities and internationalization initiatives of seven Chilean firms: eClass (e-learning), ALTO (loss prevention), Kunstmann (premium beer production), Forus (premium brands retail), Derco (vehicle distribution), Casas del Toqui (wine), and BeitGroup (children’s clothing). During the internationalization process of these companies, all the firms found it crucial first to transfer strategic capabilities developed at home to another country, and then to successfully adapt these capabilities to the foreign country context. These companies did not seek to acquire or upgrade their strategic capabilities through internationalization.
In the early twentieth century, Argentinean firms were among the first emerging market multinationals. More recently, international expansion has been conditioned by domestic economic and political turmoil. In this chapter, we analyze the internationalization strategies of seven Argentinean firms: Globant and Grupo ASSA (information technology), Grupo ARCOR (food processing), Bodega Lagarde (winemaking), Grupo Mirgor (consumer electronics), Grupo Bagó (pharmaceutic), and San Miguel (agriculture). We included firms that are in different stages of the international process: from exporters to multilatinas to operating beyond Latin America. We find that firm internationalization requires the development of strategic capabilities that complement those required to be successful in the domestic market. Whereas firms initially emphasize production capabilities and leverage cost advantages, over time they develop marketing capabilities related to understanding customer needs in different markets and managerial capabilities that allow for integrating the multinational organization. Our interviews with directors and senior managers highlight how perceptions of the business context condition the development of strategic capabilities and their deployment in international markets.
In this chapter, we integrated data obtained from the interviews conducted with business leaders from seventy-two companies across twelve emerging markets in five continents to better understand which capabilities leaders of emerging market multinationals identify as being strategic. In doing so, we examined which capabilities appear to be commonly assessed as being strategic across our study contexts, and which ones varied by industry, company multinationality, and country of origin. In particular, we examined emerging market companies headquartered in Eastern Europe (Russia and Poland), Asia (China, India, and Kazakhstan), Latin America (Argentina, Brazil, Chile, Colombia, Mexico, and Peru) and Africa (South Africa). Looking across the various capabilities identified by the senior managers in our study, our results suggest that the strategic capabilities needed by emerging market firms to be successful outside their home markets occur at multiple levels, including management level, firm level, industry level, and national level. These capabilities influence both a firm’s ability to internationalize and its ability to be successful, abilities that often have reinforcing influences on each other.
Firms from different countries face different challenges to growth and development, with firms in emerging markets generally being at a disadvantage compared to developed countries’ firms. Despite this, some emerging market firms have started expanding to other countries, becoming progressively more established. This chapter will present the case of seven Mexican firms that have undergone an internationalization process and have become multinational corporations and exporters. To analyze this, the study focused on the capabilities each firm had that provided an advantage locally and globally, and whether these capabilities were different for each market. In the comparison, it was discovered that the most common and relevant capabilities for these firms were understanding local customer needs, corporate brand and reputation, and relationship capabilities.
This chapter introduces the background and key research question of the project for this book, which is an output of a multi-country study on a highly important subject in emerging markets: what types of capabilities do emerging market firms need, and how do they acquire and upgrade these capabilities in order to achieve competitiveness in the global market? The chapter highlights two unique aspects of emerging markets: weak institutions and lack of endowment. The main theme of the book thus becomes how emerging market companies develop competitive capabilities to international levels facing these two critical constraints. The chapter also discusses the organization of the book, which comprises twelve different country studies, and presents the methodology used to select and evaluate the firms studied.
Russia is the largest country in the world, ranking ninth by population with 146.8 million people. It contains 30 percent of the world’s natural resources, making it the most resource-rich country in the world. The Russian economy is sixth in the world in terms of GDP (purchasing power parity), according to the IMF. Our study of companies’ strategic capabilities is based on a comparative analysis of five firms operating in Russia. Three of them are domestic – SIBUR (Siberian-Ural petrochemical and Gas Company), Gazprom Marketing & Trading (part of the Gazprom group), and ByTerg, all representing exporters in the high-tech industry. The other two firms are multinational companies – Ecolab and Swilar, representing the high-tech and service industries respectively. This qualitative study, relying on semi-structured interviews, revealed that customer orientation is a crucial strategic capability, highlighted by all firms. Very important strategic capabilities also include product manufacturing and general sales capabilities (highlighted by 80 percent of respondents).
This chapter seeks to investigate the nature of strategic capabilities required for Indian firms to successfully transcend domestic markets and venture abroad. The study is based on intensive case studies of four Indian firms in the manufacturing and services sectors. The findings indicates that the capabilities considered most important by the firm leaders for the internationalization of their activities were ability to develop resources internally, entrepreneurship, and ability to adjust to poor infrastructure need. Three interesting patterns also emerged in the way firms choose to expand their operations to other markets: capability complementing, capability augmenting, and new capability development. Overall, the study indicates that the competencies required to succeed are also significantly influenced by the industry type and prior history of internationalization by associated companies. To gain a better understanding of these issues it would be necessary to moderate for industry, size, and ownership effects.
Peru became one of the fastest growing economies in Latin America following its adoption of promarket reforms. However, trade openness and market liberalization created new pressures. Entrance of foreign competitors to Peruvian markets triggered upgrades to core competences by local companies. This chapter presents the way successful firms from different sectors faced institutional turmoil by upgrading specific capabilities and developing strategic responses to obtain a competitive edge. Our analysis covers companies from different sectors: Deltron (low-tech domestic firm), Cantol (low-tech exporter), Resemin (high-tech multinational), Alicorp (low-tech multinational), Alicorp (low-tech multinational), and Lolimsa (service multinational).
While the upgrading of strategic capabilities in these firms focused on improving product, service, and operational capabilities and on controlling retail operations, their strategic responses focused either on exploiting new windows of opportunity or on defending against the entrance of foreign competitors.
In this chapter, we highlight the strategic capabilities that have enabled six Brazilian companies to achieve competitive advantage. We selected firms from different industries and stages of internationalization in order to show a broad perspective of local and international successful firms. WEG and Fanen developed technological capabilities associated to both world-class manufacturing and product innovation, whereas Stefanini and Integration have consolidated knowledge about servicing emerging markets. Grendene’s production and operations are its key capabilities for international operations through exports, while innovative design and processes support their strategy in the local markets. The key capabilities of Dr.Consulta are entrepreneurship and innovation. In sum, due to highly turbulent institutional and economic environment, Brazilian firms have had to develop some specific capabilities, especially those related to financial management and organizational flexibility.
To what do we ascribe the far-reaching success of companies from emerging economies in domestic and global markets? What do emerging markets companies do differently? This chapter studies and provides a comparison of the cases of seven successful Colombian companies in different industries to identify specific attributes and capabilities that have helped these firms to overcome the liabilities associated with being situated in emerging markets, enabling them to become market leaders domestically or internationally. The findings of this study suggest that the most relevant capabilities for the success of these companies are their ability to obtain resources, their product adaptation capabilities, and their understanding of local consumers’ needs.
Polish firms focused on international markets only recently, as they were not present in the international markets during the planned economy era and thus did not develop managerial capabilities to compete. With the 1989 transition, huge opportunities for growth and development in the local market absorbed entrepreneurial talentat first. As a result, exports and outward foreign direct investments gained momentum only from the late 1990s. This chapter begins with a general picture of the economic transformation of Poland, and then analyzes the internationalization strategies and capabilities enhancing the efforts of a selected set of firms in foreign markets. Our findings reveal that the firms’ performance in foreign markets is shaped mainly by their ability to develop strategic competences related to product and technology improvement, management of relationships with partners, and those specific sensitivities to the cultural and business environment that enable the firm to gain reputation and the trust of local partners and customers and to overcome any legacy liabilities ascribed to country of origin.
This chapter provides a main argument for why business schools may be facing needs to fundamentally change perhaps more today than before. “New” pedagogy is available to make effective change happen, above all, so-called blended learning. But indeed several factors seem to slow down business schools’ capabilities and willingness to change, including a typically too strong focus on achieving favorable so-called ranking. It is the changing need of business itself, the key “customer”, that provides the main inputs for change, and the chapter concludes with a discussion of 10 such factors.
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