Strategic Management Activities Conducted by Modern Corporate Firms - Book Report/Review Example

Critical Review Contents Contents 1 Introduction 2 Summary of Khanna and Palepu 2 Critique 3 Conclusion 6 Reference List 7 Introduction This paper aims to make a critical analysis of various strategic management activities conducted by modern corporate firms. The paper will initially summarize an article written by Khanna and Palepu, regarding expansion of emerging business corporations worldwide. In the subsequent stage, the paper will accurately review six other academic sources related to the topic and finally, conduct a critical analysis about the same. Summary of Khanna and Palepu Globalization and its strict Open Door policies had greatly lowered competencies of several corporate firms in the developing nations, given that these firms could not combat with the strong multinational giants of developed nations. Nonetheless, there are a few companies, like, Mahindra & Mahindra and Tata Group, which have sustained the strong competition in marketplaces and grown by exploiting fruits of open economic principles. Even so, many of these emerging multinational giants still lack the superior competencies, which are possessed by multinational firms in developed nations. The main advantages, faced by multinational firms in the developing nations, are: (a) Higher financial reserves in business (b) Superior technologies (c) More skilled workforce (d) Efficient inbound and outbound logistics (e) Higher global business expertise and brand recognition Some of the emerging companies in developing nations, like, Tata Group and Ayala Group, are seen to make strategic moves in business in order to enhance their market competencies. They are trying to tap more funds in business, both from national as well as international economies; they are also improving quality of their skilled manpower by conducting several training and knowledge sharing sessions. However, emerging firms in developing nations possess better knowledge about the Four Tiered Market Structure (both for products and factors) in developing nations than the companies of the developed nations. Rather, the political, cultural, social and economic aspects of developing nations are better known by emerging companies of the same, compared to foreign multinational companies. Perhaps, this is the reason for which many foreign companies desire to grasp the booming market demands of developing nations, through strategic alliances with the multinational companies of these nations. The decision for business internationalization should be undertaken by a firm after analyzing the political, social, economic, cultural and technological state of a market. Critique Huei-ting Tsai had written an article regarding kingship based collaboration deals undertaken by multinational companies of developing nations. The paper focused on the business of companies from China and Taiwan. The study explains that, in recent years, as a part of internationalization strategy, multinational firms of developing nations are entering into strategic alliances so as to expand their business operations in the developed nations (Mankiw, 2011). In this case, these emerging firms are found to adopt the policy of knowledge collaboration for gaining greater competencies in the developed nations. Even so, cross-country cultural barriers have seemed to generate certain problems for these emerging firms. According to the kingship based theory, emerging firms in developing nations tend to expand their business opportunities in only those economies, where they experience similarities in geographical, social and cultural factors. The paper also stated that the complementary degree between allied firms is directly proportional to their performance in the market (Tsai, 2013). Yet, there are various authors who have claimed that characteristic features of markets are completely different in developing and developed nations. Thus, efficient marketers of emerging multinational firms should consider that product or service evaluation capabilities in developing and developed nations are completely different from each other. At present, these emerging firms constantly face constant debates regarding adoption of standardization and customization marketing strategy in business. The paper had closely reviewed the banking sector of developing and developed nations. From the analysis, the paper seems to claim that a multinational banking company should provide greater value to tangible services (like, deposit and lending operations) in developing nations. On the contrary, the same bank should aim to enhance intangible services in developed nations. The article mentioned that since external market conditions in developing and developed economies are dissimilar, marketing and operational business strategies of multinational companies should vary for different economies (Malhotra, et al., 2005). Certain scholars have also suggested that scope and nature of internationalization is evidently different for small and large scale multinational companies, both in developed and developing nations. The findings of the analysis indicated that internationalization of nearly all firms, in contemporary times, is based on the model of international entrepreneurship. This model states that business strategies of firms should be based on factors like, mode, product, market and time (Ruzzier, Hisrich and Antoncic, 2006). Scholars and researchers have provided several theoretical models and implications, which could be utilized by the emerging firms of developing nations for expanding their business in other economies across the world. Nevertheless, the global market has undergone rapid changes in the recent years, as far as market for foreign direct investment is concerned. Figure 1: Changes in FDI (Source: Tucker, 2010) The above graph explains that the scope of internationalization of emerging multinational companies in the transition and developing economies have substantially increased, over time, with certain expectations in its growing trend, during recessionary periods. When the emerging corporate firms in developing nations desire to expand their business operations in other developed economies of the world, their businesses are subjected to several changes. The decision to expand business in international marketplaces should be made by these companies after considering certain factors. The companies must be aware of bilateral and multilateral agreements and other business regulations of the foreign country (where they desire to expand business), The different types of opportunities and constraints in the foreign economies must also be noticed. The physical and technological structure of the concerned nation must be thoroughly scrutinized by these firms (Frumkin, 2006). From the above journal and academic contexts, it can be stated that the scope and success in internationalization of business is notably influenced by the strategies adopted by emerging multinational corporations. Strategic management has turned out to be an indispensable business management segment in the modern era. The internationalization decisions of firms are often undertaken, after analyzing similarities in geographical, cultural and social characteristic features of different marketplaces. Even so, in the present scenario, efficiency of entrepreneurship in a firm heavily influences its success in business expansion. The nature of business strategies to be adopted by a firm should be settled after assessing the political, economical, social, technological, environmental and legal aspects of each market. Only skilled entrepreneurs of multinational organizations are able to incorporate strategic policies in business, taking these external factors in a marketplace into consideration. Nonetheless, business internationalization strategy adopted by firms can also be undertaken, after analyzing the theory of transaction cost economics (Xu and Meyer, 2012). Conclusion Since globalization and liberalization in 1990, state of commercial affairs across nations has significantly increased, both in terms of scope and scale. The context of the paper has reviewed several authentic scholarly sources to analyze the precise nature of internationalization strategies adopted or to be adopted by emerging multinational companies of developing nations. The strong national income growth of developing or emerging world economies substantially signifies the progress of domestic firms in these nations. However, it is true that many of these firms are still facing several obstacles in business relating to economic and human capital. It has been claimed that by following the strategic management tools in business, these organizations can rectify such problems in the long run. Reference List Frumkin, N., 2006. Guide to economic indicators. New York: M.E. Sharpe. Malhotra, N. K., Ulgado, F. M., Agarwal, J., Shainesh, G. and Wu, L., 2005. Dimensions of service quality in developed and developing economies: multi-country cross-cultural comparisons. International Marketing Review, 22(3), pp.256 – 278. Mankiw, G. N., 2011. Principles of economics. Connecticut: Cengage Learning. Ruzzier, M., Hisrich, R. D. and Antoncic, B., 2006. SME internationalization research: past, present, and future. Journal of Small Business and Enterprise Development, 13(4), pp.476 – 497. Tsai, H., 2013. Towards a Guanxi-based theory of internationalization: Chinese, Taiwanese and evolving MNEs. Chinese Management Studies, 7(1), pp.111 – 126. Tucker, I. B., 2010. Survey of economics. Connecticut: Cengage Learning. Xu, D. and Meyer, K. E., 2012. Strategy research in emerging economies. Journal of Management Studies, pp.1-40. Read More