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Published: November 27, 2012
 / Winter 2012 / Issue 69

 
 

Best Business Books 2012: Strategy

Considering Competition


Amitava Chattopadhyay and Rajeev Batra, with Aysegul Ozsomer
The New Emerging Market Multinationals: Four Strategies for Disrupting Markets and Building Brands
(McGraw-Hill, 2012)

Ikujiro Nonaka and Zhichang Zhu
Pragmatic Strategy: Eastern Wisdom, Global Success
(Cambridge University Press, 2012)

Benoit Chevalier-Roignant and Lenos Trigeorgis
Competitive Strategy: Options and Games
(MIT Press, 2011)


In 2005, only 44 of the companies on Fortune’s Global 500 list were from emerging markets. In 2010, there were 113 emerging-market companies on the list, an increase of more than 150 percent. What led to this significant increase in just five years?

That’s the question taken up in this year’s best business book on strategy, The New Emerging Market Multinationals: Four Strategies for Disrupting Markets and Building Brands, by Amitava Chattopadhyay and Rajeev Batra with Aysegul Ozsomer, professors at INSEAD, the University of Michigan, and Koç University in Istanbul, respectively. In a strong field, the book stands out for taking on the important topic of global competition, and presenting original findings in a manner that’s engaging and accessible to practitioners.

The authors’ central argument is that the new generation of emerging-market multinational companies represent a trend that will transform the global economy. These EMNCs (the authors’ abbreviation) are no longer content to play a secondary role in their industry. They have, write the authors, “the ambition, vision, and confidence to want to become global giants themselves.” Some of them, such as South Korea’s LG Electronics and China’s Lenovo, have been well known for years. Others, including India’s Wipro, Taiwan’s HTC, and China’s Haier, have only recently raised their global profile. And still others are just starting their ascent to the global stage; these include India’s Apollo Tyres, Turkey’s Arçelik, and Brazil’s Natura Cosmeticos. If the current trend continues, the list of high-performing companies from emerging markets will grow, and extend to more and more industries.

For some established multinational corporations (MNCs), The New Emerging Market Multinationals will explain the strategies being followed by new competitors that are already roiling their markets. For others, the book offers a glimpse of the future, in which their competitors will come from all over the world. For EMNCs aspiring to succeed in the global arena, the book explores the immense strategic challenges to come. Not only must they compete against large and established incumbents, but they must overcome disadvantages, some real and others perceived, associated with image, brand, and culture. Any successful strategy must not only neutralize the advantage of incumbents, but find new sources of competitive advantage. Hence the reference to disruption in the book’s subtitle.

The book debunks the idea that today’s EMNCs are succeeding only because of advantaged cost positions or generous resource endowments. The authors identified four strategies in the course of their research, which included the study of 39 EMNCs, not only from the largest emerging economies such as Brazil, China, India, Korea, Mexico, and Turkey, but also from Guatemala, Jordan, Taiwan, Thailand, and more.

Two of the strategies are familiar. Some EMNCs are indeed the stereotypical cost leaders, using their advantaged cost structures, often related to wage differentials, to achieve competitive success in new markets. Others are knowledge leveragers, drawing upon their understanding of home country customers to achieve success elsewhere, perhaps following the diaspora of home country emigrants.

More interesting are the growing numbers of EMNCs pursuing a third strategic path. They are seeking to employ their particular advantages of knowledge and innovation while avoiding direct competition with powerful incumbents. These niche customizers identify specific customer segments, often small and apparently unattractive within larger markets, where they can use their expertise to establish strong beachheads and eventually expand their positions. An example is Mahindra & Mahindra Ltd., which used its expertise in producing small tractors in India to expand into the niche markets of lawn care and golf course maintenance in the United States and Australia. Similarly, Haier chose not to enter the U.S. market with large refrigerators, but instead went after the niche market for small refrigerators, suitable for dormitory rooms or wine cellars, and only later expanded its product line.

 
 
 
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