GMS522 Final Exam | Verified Q&A’s| Latest
Emerging market multinational enterprises (EMMNEs) - ✔✔defined as companies
originating from emerging markets and which are engaged in outward foreign direct
investments where they exercise control over assets and engage in value-added
activities in foreign countries
EMMNE Growth & Development - ✔✔-weak infrastructure
-weak political & institutional frameworks
-weak regulatory environment: absence of clear & consistent gov't policies
-corruption & a weak judicial system
-deeply rooted social tensions
-macroeconomic imbalances
EMMNE Non-Traditional Competitive Advantages - ✔✔-access to state resources
-unique insights into customer needs
-low cost structure
-frugal engineering
-ability to operate in hostile business environments
Developed country multinationals in response to the EMMNE threat - ✔✔-take the
EMMNE threat seriously
-exercise patience when formulating and implementing strategies in emerging markets
-become deeply engaged in emerging markets
-demonstrate a willingness to learn from competitors and their customers in emerging
markets
,-see emerging markets as places with talent that may be used to produce goods &
services that may be sold around the world and as markets with a large and growing
middle class and as centers of innovation
Springboard perspective - ✔✔-EMMNEs use outward investment as a springboard to
overcome disadvantages in their home countries
-International expansion is a recursive activity that is part of the firm's long-term
strategy to become a major global player
-EMMNE targets are likely to possess advanced manufacturing technologies or strong
global brands
-as latecomers to the global stage EMMNEs are under considerable pressure to move
quickly and aggressively to overcome their deficiencies at home
Knowledge Leverager - ✔✔-mechanistic extension
-focus on similar emerging markets
Cost Leader - ✔✔-mechanistic extension
-focus on dissimilar developed country markets
Niche customizer - ✔✔-dynamic evolution
-focus on similar emerging markets
Global brand builder - ✔✔-dynamic evolution
-focus on dissimilar developed country markets
commissioned specialist - ✔✔-narrow international diversification
-state owned
,Niche entrepreneur - ✔✔-narrow international diversification
-non-state owned
Transnational agent - ✔✔-broad international diversification
-state owned
World-stage aspirant - ✔✔-broad international diversification
-non-state owned
Internationalization - ✔✔-defined as the process by which firms become more
engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to
foreign markets and of course, various degrees of risk
Mode of Entry - ✔✔central to the process of internationalization is the selection of
an entry mode. These range from low commitment modes such as exporting high
commitment modes such as foreign direct investment
Motivation - ✔✔the motivation for internationalization may either be proactive (firm
wants to) or reactive (firm has little choice)
Uppsala or U model - ✔✔the firm first expands to a psychically close market and
having become familiar with that market, will target slightly more distant markets.
experiential knowledge is the major driver of its pattern of internationalization. The
Uppsala model has been criticized for its linear approach to the internationalization
process
, Dunnings OLI framework - ✔✔firms expand abroad to capitalize on ownership,
location and internalization advantages
Advantages of Dunnings OLI framework - ✔✔-ownership of foreign assets will confer
on the firm a competitive advantage in the foreign market which is not enjoyed by
competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives offered by
the gov't of the host country or a more favorable industrial relations climate for the
firm's operations
-internalization of firm-specific advantages such as proprietary technology confers
benefits to the firm over alternatives such as licensing
Springboard or latecomer perspective - ✔✔emerging market firms internationalize in
order to overcome limitations inherent in their home-country environment, such as
small market size, institutional immaturity or a relatively unsophisticated consumer
base. To accomplish this firms aggressively acquire strategic assets from MNCs in
developed countries
Systematic four-step process - ✔✔1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
Macro Segmentation - ✔✔-develop segmentation criteria
-apply to group countries
Preliminary screening - ✔✔-develop additional criteria
Emerging market multinational enterprises (EMMNEs) - ✔✔defined as companies
originating from emerging markets and which are engaged in outward foreign direct
investments where they exercise control over assets and engage in value-added
activities in foreign countries
EMMNE Growth & Development - ✔✔-weak infrastructure
-weak political & institutional frameworks
-weak regulatory environment: absence of clear & consistent gov't policies
-corruption & a weak judicial system
-deeply rooted social tensions
-macroeconomic imbalances
EMMNE Non-Traditional Competitive Advantages - ✔✔-access to state resources
-unique insights into customer needs
-low cost structure
-frugal engineering
-ability to operate in hostile business environments
Developed country multinationals in response to the EMMNE threat - ✔✔-take the
EMMNE threat seriously
-exercise patience when formulating and implementing strategies in emerging markets
-become deeply engaged in emerging markets
-demonstrate a willingness to learn from competitors and their customers in emerging
markets
,-see emerging markets as places with talent that may be used to produce goods &
services that may be sold around the world and as markets with a large and growing
middle class and as centers of innovation
Springboard perspective - ✔✔-EMMNEs use outward investment as a springboard to
overcome disadvantages in their home countries
-International expansion is a recursive activity that is part of the firm's long-term
strategy to become a major global player
-EMMNE targets are likely to possess advanced manufacturing technologies or strong
global brands
-as latecomers to the global stage EMMNEs are under considerable pressure to move
quickly and aggressively to overcome their deficiencies at home
Knowledge Leverager - ✔✔-mechanistic extension
-focus on similar emerging markets
Cost Leader - ✔✔-mechanistic extension
-focus on dissimilar developed country markets
Niche customizer - ✔✔-dynamic evolution
-focus on similar emerging markets
Global brand builder - ✔✔-dynamic evolution
-focus on dissimilar developed country markets
commissioned specialist - ✔✔-narrow international diversification
-state owned
,Niche entrepreneur - ✔✔-narrow international diversification
-non-state owned
Transnational agent - ✔✔-broad international diversification
-state owned
World-stage aspirant - ✔✔-broad international diversification
-non-state owned
Internationalization - ✔✔-defined as the process by which firms become more
engaged in international markets.
-the process involves varying degrees of financial and other resource commitments to
foreign markets and of course, various degrees of risk
Mode of Entry - ✔✔central to the process of internationalization is the selection of
an entry mode. These range from low commitment modes such as exporting high
commitment modes such as foreign direct investment
Motivation - ✔✔the motivation for internationalization may either be proactive (firm
wants to) or reactive (firm has little choice)
Uppsala or U model - ✔✔the firm first expands to a psychically close market and
having become familiar with that market, will target slightly more distant markets.
experiential knowledge is the major driver of its pattern of internationalization. The
Uppsala model has been criticized for its linear approach to the internationalization
process
, Dunnings OLI framework - ✔✔firms expand abroad to capitalize on ownership,
location and internalization advantages
Advantages of Dunnings OLI framework - ✔✔-ownership of foreign assets will confer
on the firm a competitive advantage in the foreign market which is not enjoyed by
competing firms that do not own such assets
-location confers advantages in terms of tax or other investment incentives offered by
the gov't of the host country or a more favorable industrial relations climate for the
firm's operations
-internalization of firm-specific advantages such as proprietary technology confers
benefits to the firm over alternatives such as licensing
Springboard or latecomer perspective - ✔✔emerging market firms internationalize in
order to overcome limitations inherent in their home-country environment, such as
small market size, institutional immaturity or a relatively unsophisticated consumer
base. To accomplish this firms aggressively acquire strategic assets from MNCs in
developed countries
Systematic four-step process - ✔✔1)Macro segmentation
2)Preliminary screening
3)Secondary screening
4)Final security selection
Macro Segmentation - ✔✔-develop segmentation criteria
-apply to group countries
Preliminary screening - ✔✔-develop additional criteria
