The document discusses the challenges and competitive strategies of emerging market companies, particularly in countries like China, India, and Brazil, as they strive to compete with established multinational corporations. It highlights how these companies leverage local market knowledge and adapt to institutional voids to gain a competitive edge. Additionally, it notes several successful firm examples, along with the importance of understanding the unique dynamics of emerging markets in contrast to developed markets.

1. Emerging Giants:
Building World Class Companies From Emerging Markets
Group 8
Payal Agrawal (F003) | Ajith Konda (F028) | Aditi Goyal (F017) | Abhishek Tater (F062) | Vandita Singh (F058) |
Mrityunjay Dhamar (F016) | Anand Krishnan (F029)

2. Introduction
 Emerging markets – China , India, and Brazil
 Goal - To be globally competitive and to exploit new globalization opportunities
 Challenge – To compete with multinational companies
Multinationals –
 They are well established, and therefore have the benefits of incumbency: brand
name, organizational capabilities, and advanced technologies
 They can also leverage their access to vast resources – finances, talent, and supplier
and distribution networks in their home markets

3. What Emerging Giants do not have?
 They come from economies that suffer from severe market failures
 They often lack good infrastructure
 When their economies open up, emerging market companies are forced to compete with their
advanced market counterparts
 They cannot access risk capital with the same ease and cost
 They are hampered by unreliable quality of their supply network
There is a concern about being wiped out in their domestic market by multinationals when their domestic
markets open
However, there are a growing set of companies that appear to buck these odds, and have done well in
their battles against multinationals

4. Achieving Competitive Advantage against Multinationals
Emerging market companies can turn the disadvantages into an advantage
 Managers at local companies know how to work around the institutional voids which is difficult for the MNCs
 MNCs are reluctant to tailor their strategies, products, services, and communications for developing market
as its costly , cumbersome and risky
 Getting listed on NYSE or Nasdaq, it becomes easy for them to access to the capital the same way American
multinationals do
 Several emerging companies have been successful to cope up with local institutional voids by developing
their own internal organizational mechanism

5. Achieving Competitive Advantage Against Multinationals
Generic business opportunities where building
competitive advantage is likely
Three generic ways to do it :
 Capitalize on institutional voids in the product markets
 Capitalize on institutional voids in the factor markets
 Alleviate institutional voids
Generic Opportunity 1 : Exploiting unique knowledge of domestic product
markets
 The emerging companies capitalize on their knowledge of a unique local product market situation
 They also exploit the similarities in the geographically nearer countries
Ex - Jollibees in the Philippines, Nandos n S Africa
They used their mastery of unique taste of their domestic market to expand globally
Ex - Haier

6. Achieving Competitive Advantage Against Multinationals
Generic Opportunity 2 : Exploiting unique knowledge of domestic factor
markets
 They capitalize on their knowledge about the local factors of production like talent,
and capital markets.
 Some capitalize on the knowledge of their supply chain
Ex – Indian IT majors – TCS, Infosys

7. Achieving Competitive Advantage Against Multinationals
Generic Opportunity 3 : Exploiting Local Institutional voids as business opportunities
2 types of market institutions:
1. Facilitate credible information flow in the market
e.g.. ISO certification, GMAC, Stock Market, Publications rating universities and schools
2. Facilitate transaction through aggregation and distribution of goods and services or by creating forums where
seller and buyer can transact directly. e.g.. Banks, retailers, labour unions. EBay, online job portals
 Potential advantages to Emerging market business:
a. Human capital intensive.
b. Information intensive.
c. Government give national importance to these institutions.
 Limitations:
a. Opportunities are limited if market size is small.
b. Market is segmented into global and local piece. E.g. Citicorp

8. Journey From Presence In Local Market To Global Market
Identified countries of interest
 Jeffery Garten – Big 10 Emerging Markets
 Countries that attracted attention of Global investors- included in the investment portfolio of big mutual fund
companies e.g.. Fidelity, Vanguard
(Brazil, China, Mexico, India, South Africa, South Korea)
 Included countries that were frequently discussed.
(Argentina, Indonesia, Turkey, Poland)
 To include companies of these countries-
-Forbes Global 500 and Forbes International 500 lists
-Companies where investors have invested
 Included companies from International History of Company Directories
 So total now there were 134 firms.

9. SAB build its plant capability and distribution
network through incremental growth
• The inside-out approach is deemed to be the better approach for expansion for firms in emerging economies : South African Breweries(SAB)
8/3/2017 9
Developed unique ability to distribute beer outside
formal channels thereby reaching black south African
population during the apartheid period
Tailored local tastes for Southern African
countries
Entered Eastern Europe, China, India
and finally the US
Precedence

10. International expansion
primarily in a single product
line, without much
product diversification
Frequent divestitures and
access to capital markets,
possibly indicating a cash
shortage
Tendency to build a strong
domestic base by domestic
acquisitions before
international expansion.
Cluster 5
Cluster 4 Cluster 3
Cluster 2
Cluster 1
Companies that focused on product
diversification, often with joint ventures
A small group characterized by many
organizational structure changes or
ownership/management changes
Types of Company’s Approach

11. • Would-be stewards of emerging giants worldwide are thirsty for knowledge. Naturally, they seek to emulate their brethren in
the developed world. While endorsing the quest for know how, our experience leads us to issue some caveats
• Simple-minded reproduction of an observed phenomenon from a mature western economy to an emerging market setting
is unwarranted
• The ‘truths’ that emerge from immersion in mature economic contexts (like the US, or Western Europe) do not transfer
over unmodified to emerging markets
There are world-class
companies that are not quite as global as one might
expect. Consider the Tata group in
India
Snake oil and Globaloney: Revisiting
Shibboleths
Employees in a particular industry may have very
different bargaining power
(vis-à-vis firms in that industry) from one country to
another depending on their ability to
‘walk away’ from un favourable outcomes in which
they might find themselves
The Paramount Importance of Industry
Some companies, like Sony and Nomura, the dominant
consumer electronics and
investment banking companies, have embraced US style
corporate governance rules,
whereas other, equally prominent ones, like Toyota and
Canon, have not
Governance and the imperative of
the US model
Yamaha’s transition from music to motorcycles
Nokia, the celebrated cell phone company started life
as a forestry company
The importance of core competence
Confronting Strategic Truth

12. THANK YOU