Most types of local organizations have been prosperous in growing countries. Some are part of the ancient corporation owned by entrepreneurship families or magnates. Others are small start-ups initiated by a post transformation of entrepreneurs’ age group. All the organizations face high competition from enterprises owned by government and local peers. These domestic enterprises owned by private sectors have defeated their competitors through use of various strategies:
Customized Services and Products
Domestic grown champions have got huge understanding of the local consumers. They understand consumers’ preference by their regions, level of income, gender and age set. These companies also grab the raw materials structures, components and markets for their finished products in their area of operation. Therefore, they can supply consumers with low customization level cheaply. These local companies create offerings modified to numerous market places and studies to develop a huge range of services or products cheaply. However, due to the rapid change in consumer’s preferences, customized services and products have difficulties in maintaining.
Create a Business Model to Conquer Major Obstacles
Multinational companies frequently protest against insuperable problems, issues of structures like channels of distribution or hurdles of infrastructure such as insufficient telecommunication, band width which hinder them from conducting transactions in their normal ways. Elegant domestic companies are skillful at identify the main difficulties which their market poses and from that point they design strategies to conquer or evade those challenges. Actually, multinational business there copy after the same techniques but by the time the local ones have enjoyed their first-mover benefits. Business model in the developing countries is encountered with various challenges such as poor infrastructure which increases cost of production and distribution.
Use of Latest Technology
Contrary to the well-known believes, domestic services and products winners frequently incorporate the modern technologies. Latest technologies enable organizations to overwhelm competitors which believe they can gratify domestic consumers with obsolete technologies. Relieved by old processes or early investments, the start-up companies invest into the high-tech development to bring down the cost and provide the consumer fresh features. However, it is very expensive for start-up enterprises to acquire and maintain such technologies.
Talent Invest To Sustain Fast Growth
Multinational businesses face domestic competition in emerging markets with the entrepreneurial enthusiasm and the knack of maintaining fast growth in long-run. As a matter of fact, many multinational corporations despise the management strength and ability of the competitors which have an added advantage of not requiring consulting with headquarters in a distance locality. There are no well known ways to avoid that altogether, but elegant companies reduce senior management turnover and institutionalize the system of management to deal with the challenges of fast growth. Talent investment is very significant in fast growing enterprises though it is expensive to retain them in the enterprise.
Acquisition, Alliance and Merger
Partnerships and mergers seem to be the most appropriate way for organizations to acquire the required size and compete against consolidating competitors in order to minimize their dependency on local markets and acquire production economics of scale. Merger is therefore amalgamation of two or more related business enterprises which forms one large enterprise. Whereas acquisition is when one enterprise acquires all assets and liabilities of another enterprise. Unlike in mergers whereby both enterprises dissolve to form a new one, only the acquired enterprise in acquisition is dissolved. However, in alliance, none of the enterprises is dissolved but both enterprises agree to trade together to overcome economics hardships and reduce market competition.
There are various reasons why organizations enter into joint venture. Companies contract into joint ventures during economical difficulties so as to be able to survive. Additionally, when an organization wants to invest in high risk business, it enters into a joint venture to reduce the risk involved. Actually, some technologies are very expensive for a single organization to acquire and therefore an organization is forced to form a joint venture with other organization to be able to acquire it.
Conflicts Encountered By Country Manager.
Country managers as the front unit of operation are faced with the diversity challenges and multiplicity of constituents which pressures and demands to compete for their attention. Their task is also to corporate expectation which they take – the broad corporate strategies and goals and transfer them into particular actions which are responsive to the requirement of the national surrounding. Country managers find it difficult to implement their tasks in various social and political trends within the business market.
An example of a responsive MNE is when a big corporation enters to solve major problems into the poor nations with the introduction of modern technology. Responsive MNE is sensitive since it is proactive in the manner in which it handles its stakeholders. An instant of transactional MNE is where a rescue officer robes a victim while rescuing them from certain disaster. Transactional MNE is aimed at profit maximization and has been blamed for cultural insensitivity.
The visiting executive should have advised the foreign subsidiary to stop practicing transactional MNE since it is insensitive to cultural trends. They should also be practitioners of a responsive MNE and sponsor the studies of the child if the foreign subsidiary is no willing to do so.