The BCG report elaborates how MNCs struggle in RDEs like India, win-win partnerships are the best option
Moreover, the report does not highlight the kind of bottlenecks that MNCs often face in the local market at the government end, like extended periods of protectionism. For instance, the Indian telecom market has only recently allowed 74% FDI, which was earlier restricted to 49%; and retail FDI is still a burning issue; one of the reasons why Wal-Mart has made a very quiet entry. Meanwhile, most domestic giants have managed thus far to lobby successfully for their own gains at the cost of the foreign companies.
Nevertheless, MNCs realise the worth off the RDEs and are ready to take the risks involved. They scale up, stumble and may even fall flat, but they do not want to bail out so easily. “Multinationals are looking at every opportunity available. They are using the path of aggressive marketing, localisation, associations and tie-ups as few strategies to make space for themselves,” states Dungarwal.
Indeed, the best recourse in such instances becomes engaging in win-win partnerships with local firms, though there are examples of companies that have done very well without it (like Nokia, LG, HP and Pepsi). Interesting examples like Hero Honda, Bharti Wal-Mart (so dynamos are not necessarily anti-MNC!); Reliance Retail-Marks & Spencer, Tata-Fiat, Mahindra-Nissan, Emaar-MGF et al only go on to show the importance of such partnerships, which are tremendously beneficial to local players as well. After all, if the terms had been mutually beneficial, even the Spartans could have made up with the Persian invaders!
Moreover, the report does not highlight the kind of bottlenecks that MNCs often face in the local market at the government end, like extended periods of protectionism. For instance, the Indian telecom market has only recently allowed 74% FDI, which was earlier restricted to 49%; and retail FDI is still a burning issue; one of the reasons why Wal-Mart has made a very quiet entry. Meanwhile, most domestic giants have managed thus far to lobby successfully for their own gains at the cost of the foreign companies.
Nevertheless, MNCs realise the worth off the RDEs and are ready to take the risks involved. They scale up, stumble and may even fall flat, but they do not want to bail out so easily. “Multinationals are looking at every opportunity available. They are using the path of aggressive marketing, localisation, associations and tie-ups as few strategies to make space for themselves,” states Dungarwal.
Indeed, the best recourse in such instances becomes engaging in win-win partnerships with local firms, though there are examples of companies that have done very well without it (like Nokia, LG, HP and Pepsi). Interesting examples like Hero Honda, Bharti Wal-Mart (so dynamos are not necessarily anti-MNC!); Reliance Retail-Marks & Spencer, Tata-Fiat, Mahindra-Nissan, Emaar-MGF et al only go on to show the importance of such partnerships, which are tremendously beneficial to local players as well. After all, if the terms had been mutually beneficial, even the Spartans could have made up with the Persian invaders!
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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