The purpose of the thesis is to present selected business strategies and link them with the ability of Emerging Market Multinational Enterprises (EMNEs) to build and strengthen competitive advantages. Further to that uses the thesis empirical case studies of Tata Motors from India and Lenovo from China to analyse their performance and competitive advantages.
The results of the thesis reveal that EMNEs employ competitive advantages which underpin their expansion abroad. These advantages are mainly built by finding innovative opportunities to leverage country specific advantages. In addition, competitive advantages are obtained by accessing new knowledge in advanced markets through cross-border acquisitions. The case studies reveal, that EMNEs acquire abroad to access knowledge such as brand reputation and technologies. As a result, the international value chain structure needs to be configured.
A meaningful phenomenon of global competitiveness is the increasing amount of Emerging Market Multinational Enterprises (EMNEs) that have succeeded in the con- straining institutional home markets and are now participating globally due to foreign direct investments. However, despite the increase in academic research explaining the internationalization of EMNEs, little research has been carried out to analyse the success of EMNEs.
Table of Content
1. Introduction
1.1. Context and Problem
1.2. Current State of Research
1.3. Methodology
1.4. Structure of the thesis
2. Theoretical framework
2.1. Characteristics of Emerging Market Multinationals
2.2. Reasons for the Internationalisation of EMNEs
2.3. Selected Theories on Identifying Competitive Advantages
2.3.1. Mintzberg’s SWOT Analysis
2.3.2. Rugman’s FSA / CSA Matrix
2.3.3. The Market-Based-View in Extension of Porter’s Five Forces
2.3.4. Linking the Resource-Based-View with the VRIO Framework
3. Empirical Cases of Tata Motors and Lenovo
3.1. Tata Motors
3.1.1. Business Strategy and Acquisitions
3.1.2. Performance Analysis
3.1.3. Results of the Tata Motors Case
3.2. Lenovo Group
3.2.1. Business Strategy and Acquisitions
3.2.2. Performance Analysis
3.2.3. Results of the Lenovo Case
4. Conclusion
4.1. Summary
4.2. Managerial Implications
4.2.1. Innovation
4.2.2. International Value Chain Configuration
4.2.3. Offshore M&A
4.3. Theoretical Implications for further Research
4.4. Limitations
Objectives and Core Topics
The primary objective of this thesis is to investigate how Multinational Companies from Emerging Markets (EMNEs) develop and strengthen their competitive advantages in global markets. Through an analysis of selected strategic frameworks and empirical case studies of Tata Motors and Lenovo, the research aims to uncover how these enterprises leverage their home-country advantages while seeking strategic assets in advanced economies to become global players.
- Internationalization strategies and motives of EMNEs.
- Application of Western strategy theories (SWOT, FSA/CSA, VRIO) to emerging market contexts.
- Empirical performance analysis of Tata Motors and Lenovo post-acquisition.
- Managerial strategies for innovation and value chain configuration.
- The impact of cross-border acquisitions on sustainable competitive advantage.
Excerpt from the Thesis
3.1.2. Performance Analysis
According to (Aybar & Ficici, 2009), acquisitions of EMNEs often destroy rather than create value. With regard to the performance of Tata Motors after the acquisition of JLR in 2008, this assumption will be examined. In the 10 months post acquisition, sales volumes plunged 32% and the unit recorded a loss of 461 million USD. Moreover, Tata’s total debt in March 2009 increased to 9,72 billion USD and nearly doubled what it owned before the acquisition (Laddha, 2016). As the initial figures reveal, the company’s performance seemed to have a negative impact on the firm’s value. For a more profound analysis, the distribution of market shares, as well as financial and profitability ratios will be evaluated.
A decreasing market share in both commercial and passenger vehicles was identified as a threat within the SWOT analysis. Respecting the total industry sales in the automotive industry from 2008 to 2012, total sales grew by 61.64%, while Tata increased its total sales slightly above industry average to 61.89%. Consequently, the company must have used its FSAs to overcome its competitors. However, the identified threat which occurred seven years later when the industry sales of commercial vehicles decreased to a 21.77% lower level in comparison to 2012 while passenger vehicles sales grew again by 2.58%. Apparently, as Table 3 shows, the market slowdown had an enormous impact on Tata Motors because its total sales dropped by 40.71% in comparison to the level of 2012. Along with Tata’s decreasing sales volumes in 2015, the company went from a total market share of 24.40% in 2008 to 13.10% in 2015, which reveals that either macroeconomic factors or internal reasons limit a positive development (Tata Motors, 2009, 2013, 2016).
Summary of Chapters
1. Introduction: Introduces the rise of emerging market multinationals and defines the exploratory research objective of analyzing how they gain competitive advantages.
2. Theoretical framework: Examines characteristics of EMNEs and assesses relevant strategic models including SWOT, FSA/CSA, Market-Based View, and the Resource-Based View with the VRIO framework.
3. Empirical Cases of Tata Motors and Lenovo: Provides a detailed empirical assessment of the business strategies and post-acquisition financial performance of two major EMNEs.
4. Conclusion: Summarizes key findings, offers managerial implications regarding innovation and value chain configuration, and discusses limitations of the research.
Keywords
Emerging Market Multinationals (EMNEs), Competitive Advantage, Internationalization, Foreign Direct Investment (FDI), Tata Motors, Lenovo, SWOT Analysis, VRIO Framework, Strategic Assets, Asset-Augmentation, Cross-Border Acquisitions, Value Chain, Performance Analysis, Global Strategy, Latecomer Advantages.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis explores how Multinational Companies from Emerging Markets (EMNEs) manage to build, strengthen, and leverage competitive advantages in global markets despite being latecomers to these industries.
What are the central themes of the study?
Central themes include the motives behind internationalization, the application of strategic management theories, the evaluation of corporate acquisitions, and the analysis of financial performance and value creation.
What is the main research question?
The central research question is: “How do Multinational Companies from Emerging Markets gain competitive advantages in global markets?”
Which scientific methods are employed?
The study utilizes a systematic literature review to build a theoretical framework, followed by an exploratory, qualitative, and quantitative case study analysis of Tata Motors and Lenovo.
What is covered in the main section of the paper?
The main section details the business strategies, acquisition histories, and performance metrics of Tata Motors and Lenovo, benchmarking their results against industry standards.
Which keywords best characterize the research?
The research is best characterized by terms such as Emerging Market Multinationals, Competitive Advantage, Asset-Augmentation, Cross-Border M&A, and Value Chain Configuration.
Why were Tata Motors and Lenovo chosen as case studies?
They represent leading emerging market enterprises that have pursued ambitious internationalization strategies through significant cross-border acquisitions, making them ideal subjects for testing theoretical models.
What were the findings regarding the acquisitions analyzed?
The research concludes that while these acquisitions helped the companies gain global market share and legitimacy, they initially resulted in poor financial performance and value destruction, rather than immediate sustained competitive advantage.
What managerial recommendations does the author provide?
Managers are advised to focus on deep integration of acquisitions, emphasize innovation and process re-engineering, and strategically configure their value chains to overcome the disadvantages associated with their emerging market origins.
- Quote paper
- Jonas Dubiel (Author), 2017, How do multinational companies from emerging markets gain competitive advantages in global markets?, Munich, GRIN Verlag, https://www.grin.com/document/541366
