From Copycats to Innovators - Case Study Example

From Copycats to Innovators Introduction Core resources and capabilities of emerging multinationals from emerging economies Emerging multinationals from emerging economies have certain core resources and capabilities that enable them to access high market share of the local economy. Emerging multinationals are capable of utilizing their home-grown competitive strengths to make global alliances and acquisitions that facilitate their learning capabilities (Peng, 2013). The emerging multinationals focus more on learning on how to compete with the high-end products and acquiring business segments of established global players in order to facilitate learning. A clear example is the acquisition of IBM’s PC division by Lenovo and acquisition of Land Rover by Tata Motors. After knowledge acquisition, the multinationals then focus on mid-tech innovative products thus leading to affordable products through the reverse innovation process. Good examples of new innovations is China;s BYD, a battery maker that has attained huge market in developing electric cars and Tata’s Nano Car that is cheaply priced at approximately $ 2,500 and mass produced across the globe (Peng, 2013). Another core capability of emerging multinationals is the ability to adapt the emerging technologies to small-scale markets of the developing economies. In this case, the company is capable of developing a specialised variation of the product and incrementally improving the product in order to meet the needs of the niche market (Peng, 2013). For instance, Samsung of Korea and Acer from Taiwan have built their global reputation and market share through adapting the technology to the domestic markets and focusing on specialised variations of the mainstream products offered by multinationals in developed economies (Peng, 2013). Emerging multinationals enjoy cheap labour and access to natural raw materials in their production process (Peng, 2013). Developing countries enjoy high number of semi-skilled and skilled labour that offer their services at low wages and huge natural raw materials thus reducing the overall costs of production. In addition, the companies face lenient government regulation due to low concerns of climate change, product quality standards and pollution in the economy (Peng, 2013). The emerging multinationals have more freedom in initiating new structures and values unlike the established global players that have long histories and static cultures (Peng, 2013). Core resources and capabilities of most multinationals from developed economies The multinational from developed countries enjoy certain core resources and capabilities that enable them compete effectively in the market. The multinational enjoy innovative capabilities due to access to superior technology that leads to production of high-tech products for the niche market (Peng, 2013). Accordingly, multinationals from developed economies have well established research and development teams that continuously monitor consumer demand changes such as changes in consumption patterns, shifts in tastes and emerging technologies that enable them to develop new products (Peng, 2013). Multinationals from developed countries have high access to financial capital in the international capital markets due to their ability to provide security for bonds and loans (Peng, 2013). Accordingly, multinationals from developed countries have a talented human resource base that includes cross-cultural teams thus facilitating entry in to foreign markets and learning of the needs of cultural markets (Peng, 2013). In this case, the multinationals from developed countries are capable of establishing global partnerships in their wide network in order to facilitate new product development. A clear example is Hewlett-Packard and NCR that leveraged on their business capabilities and transformed the production facilities to new technology innovation centers (Peng, 2013). Multinationals from developed countries have intellectual property rights such as registered trademarks, patents, copyrights and industrial design rights. Accordingly, the companies enjoy access to customer databases and business systems and a cutting-edge in the knowledge-based economy due to ability to protect their intellectual capital (Peng, 2013). The developed countries’ multinationals have global brand names and positive reputation due to the perceived high quality of their products. In this case, the companies enjoy higher customer satisfaction and loyalty than emerging multinationals. Dealing with some of the copycat strategies embraced by emerging multinationals that violate the intellectual property rights of their rivals in developed economies As the Chief Executive of the emerging multinational, I will adhere with the intellectual property protection laws and discourage copycat strategies that infringe the trademarks, patents, and trade secrets of the multinationals from the developed countries (Peng, 2013). The intellectual property rights laws are designed to safeguard the economic and moral rights of the creators and promote creativity while encouraging fair trading practices that contribute to social and economic development. In this case, I will ensure the business adheres with the provisions of World Intellectual Property Organisation and Paris Convention for the Protection of Intellectual property (Peng, 2013). I will encourage innovation and production of high quality products in order to avoid the copycat strategies. In this case, I will establish research and development teams that will monitor the changes in the external business environment and initiate innovative research on new technologies, new processes and new products (Peng, 2013). In addition, I will encourage learning through forming of partnerships with leading global multinationals or making acquisitions of innovative ventures in order to facilitate innovation and eliminate the temptations of copycat strategies (Peng, 2013). According to justice and natural rights ethics principle, the owners of the intellectual property rights and it is inappropriate for the emerging multinationals to misuse the ideas. In addition, utilitarian-pragmatic argument requires private property protection in order for the owners to enjoy tangible returns from their investments and encourage innovation (Peng, 2013). Accordingly, I will ensure the business complies with Article 27 of the Universal Declaration of human rights that grants protection of material interests resulting from scientific, artistic or literary production in order for the emerging multinational to meet its moral obligation. I will avoid misappropriation of trade secrets for commercial purposes (Peng, 2013). Conclusion Emerging multinationals have excellent learning capabilities and have access to cheap labour while multinationals from developed countries have high technology and innovative capabilities. It is ethical to avoid intellectual property infringement in order to facilitate creativity, encourage competition and avoid costly legal suits in emerging multinationals. Reference: Peng, Mike. 2013. Global strategy. Mason: South-Western. Read More