The emerging market multinational or simply EMM is the type of enterprise, which is being headquartered within any emerging market and hence is engaged in the outbound FDI (Ramamurti, 2012). The globalized market is dominated by the multinationals from the respective developed economies. The experienced multinationals have invested within the foreign direct investments and even have contributed their experience sharing as well as knowledge sharing within the several small and medium enterprises. The MNC or multinational corporation is the corporate company that owns as well as controls production of services and goods in at least one specified country other than the home country (Claessens & Yurtoglu, 2013). The following essay outlines a brief comparison between emerging market multinational and Multinational Corporation. A proper relation of FSA and CSA to the motives of EMM and MNC will be described and the effect of these motives on the internationalization processes will be provided in the essay.
The nationality of any organization could be eventually defined by the company headquarters and by its ownership controls. There are various types of emerging marketing multinationals (Eichengreen, 2013). This type of sub division is done on the basis of the globalized orientation motives. The major sub divisions or types of emerging marketing multinationals are as follows:
i) Market Seeking EMM: The first and the foremost type of the EMM or emerging marketing multinational is the market seeking EMM. Any firm might substantially aim at the expansion of the markets after significantly following the major success reports of the exports. This type of expansion of the markets is completely dependent on several factors like the government regulations and hence there is a higher requirement of adapting the products to the local conditions or requirements (Dana, 2013). This particular type of EMM is solely responsible for the proper reduction of the transactional costs.
ii) Resources Seeking EMM: The second important and significant type of the emerging marketing multinationals is resources seeking EMM. The respective foreign economic activities of the resource seeking EMM are completely motivated by the significant requirement to be safe and secured and to involve cheaper sources of raw materials or inputs.
iii) Efficiency Seeking EMM: This is third type of emerging marketing multinationals (Korinek, 2018). These are the firms that eventually seek to primarily improvise the cost efficiency by simply moving the respective production activities to the low cost markets. This particular type hence is extremely efficient and important for the small and medium sized enterprises.
iv) Strategic Asset Seeking EMM: The final type of this emerging marketing multinational is the strategic asset seeking EMM. All of these firms utilize the overseas investments as the major tools for the core purpose of acquiring the tangible or intangible strategic assets, which are not available within the home markets.
Each and every above mentioned type of emerging marketing multinational is extremely important and significant for their expansion of business (Aizenman, Binici & Hutchison, 2014). There are several subsequent features of these multinationals and since they are present in the emerging markets, it is quite vital for them to expand their business properly and globally. Moreover, several marketing strategies and factors are also present to make these emerging marketing multinationals successful in the developing market.
On the contrary, the multinational corporations or MNCs are substantially sub divided into three major types, which are as follows:
i) Transactional Corporation: The first and the foremost type of Multinational Corporation is transactional corporation. These are the unincorporated or incorporated enterprises that subsequently comprise of the parent enterprises as well as their foreign affiliates (Cuervo-Cazurra & Ramamurti, 2014). This type of firms are extremely popular and efficient in respect to the multinational companies and thus are spread over the world globally.
ii) Parent Enterprises: The second important and significant type of multinational corporations is the parent enterprise. This particular type of companies is majorly responsible for controlling the assets of the other entities within the countries other than the home country (Al-Najjar, 2013). The parent enterprises comprise of some of the most popular small and medium enterprises and hence making them complete.
iii) Foreign Affiliates: The third type of the multinational corporations is the foreign affiliate. This type of foreign affiliate is the unincorporated or incorporated enterprise, where any investor, who is the subsequent resident in any other economy, could own any stake, which provides permission of the lasting interests within the proper management of that particular firm or enterprise (Mishra et al., 2014). This foreign affiliate comprises of three sub divisions of subsidiary, associate and branch.
These above mentioned types of emerging marketing multinationals and multinational corporations have a major relationship with the Firm specific Assets or FSA and Country Specific Assets or CSA. The framework of the FSA and CSA is responsible for providing assets to the international companies with a different relevance for these EMMs and MNCs. The firm specific assets are those assets, which are specific to any firm and is the result of contributions, which could be made by the organizational technology, equipment and personnel (Blitz, Pang & Van Vliet, 2013). However, the country specific assets are those assets, which are specific to any particular country and could result from the competitive environment, labour forces, industrial clusters and natural resources. After the proper combination of CSAs and FSAs, the EMMs and MNCs could easily investigate the various issues. It is being checked that the CSAs of the home country of multinational corporations are dominant in respect to the FSAs, which are weak globally. The comparative advantages of any country eventually lead to exports of that country and hence comprising of the major characteristics of the MNCs (Marquis & Raynard, 2015). When the FSAs are strong and the CSAs are weak, major focus is provided to the international strategy of exploiting the organizational resources and not having a stronger influence on the location. Hence, there is a significant relation of FSAs and CSAs with the motives of EMMs and MNCs for their expansions.
The emerging market multinationals from the various developed countries are eventually shaping the emerging market, in which the companies are present and significant and noteworthy opportunities are being created (Soedarmono, Machrouh & Tarazi, 2013). Moreover, acquisitions are also made and thus the foreign direct investments or FDI are made and expanded for each and every developing market. The multinational corporations or the MNCs have their branch offices or factories in several countries and also have a specific centralized head office, in which they could easily coordinate the globalized management. The budgets of these multinational corporations eventually exceed the respective budgets of the smaller companies (Menkhoff, 2013). Both EMMs and MNCs are extremely important and noteworthy for the international markets and hence are used globally. However, there are some of the major differences between the motives of these EMMs and MNCs and these various differences are provided below:
iii) Quality: Being players in the emerging or developing market, the EMMs give a strong focus on the quality and have often gained international quality certificates for using in the useful methodology (Williams, Alsakka & Ap Gwilym, 2013). However, sometimes MNCs could not provide higher quality to each and every product and hence issues arise.
The internationalization is the significant procedure for the purpose of incrementing the core involvement of enterprises within the international markets. The organizations, who want to have internationalization within their business, subsequently require possessing the ability of thinking globally and hence having the major understanding of several international cultures (Al-Najjar, 2013). The significant appreciation as well as understanding of the various beliefs, business strategies, values and behaviours is vital for the successful implementation of internationalization within the business. This particular process of internationalization comprises of five distinct steps, which are as follows:
i) Indirect Exports: The first and the most significant step is indirect exports. It eventually refers to the selling to any intermediary, who would sell the products either directly to the customers or by importing to the wholesalers.
ii) Direct Exports: In this particular situation, the specific organization sells the products directly to the customers within any other company by not utilizing any other organization for making the arrangements for them.
iii) Licensing or Franchising: After the direct exporting, the third step is licensing or franchising (Claessens & Yurtoglu, 2013). In this particular step, the organization gets its license and has permission for international trade.
iv) Shared Ownership Mode: In the fourth step, the ownership of the company is being shared with an existing organization.
v) Full Ownership Mode: Finally, in this step, the organization gets complete ownership and becomes an independent organization with internationalization.
The major motives of the EMMs or MNCs are strongly affected by the internationalization process. The main motive of the EMM is to acquire several international resources and expand their businesses globally. Since, internationalization is a sequential process, EMMs would not be facing severe complexities regarding their motives and hence would be able to expand their business internationally (Ramamurti, 2012). For the multinational corporations, they have the motives of bringing more success in the business by simply involving more and more creativity and innovation. This is possible with internationalization process and hence MNCs would be highly benefitted.
Conclusion
Therefore, from the above discussion, it can be concluded that the emerging market multinational has given rise to the smaller or medium sized organizations from the rapid developing economies. The contribution of the external forces like governments, lower labour expenses and various others have substantially become the globalized key players. Although the emerging marketing multinationals or EMMs have not primarily internationalized successfully for the cheap products they have produced; some of the major features have described that these multinationals are emerging slowly and steadily. The cheaper labours as well as government subsidies are being helpful to them for making their positions much stronger. MNC or Multinational Corporation, on the other hand, comprises of the facilities as well as other assets within at least one country and apart from the home country. These are also referred to as the international, stateless and transnational corporations. The above essay has properly outlined the detailed comparison between the emerging marketing multinationals and the multinational corporations for their methods of doing the business.
References
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