ASIAN MULTINATIONALS

Introduction

Over the period, the global environment has experienced increased technological advancement and the invention of better methods of conducting business enterprises. These developments have resulted in the enhancement of business performance. Because of the presence of high industrialization and manpower, the western market has been on the forefront in development and creation of market revolution. Global technological advancements have resulted in the increased performance of the world market characterized by increased contribution from all the nations of the world. One remarkable market that has experienced revolution is the Asian market. The establishment of the market in Asia has resulted in tremendous growth and expansion into the nearby markets. In a bid to increase the profits of the companies, the Asian multinational corporations have initiated the incentive to expand to expand to the western markets that are already established. Expansion is extremely critical for the development of the firm because the firm expands its horizons by satisfying increased number of customers thereby enhancing the amount of profits made at the end of the trading period. Studies conducted have shown that the Asian MNCs are constantly expanding to the western markets where they find more opportunities and profitability. The expansion to the western markets has been prompted by the need to explore the industrialized market where the consumers already have information about the existence of their products. The planners of the Asian MNCs considered a significant move to the developed nations because the neighboring Asian markets posed the same challenges, physical environments and identical political stability (Aswathappa, 2005 35). On the other hand, the western markets present the Asian market with a different dimension of physical environment, economic stability and political stability.

The establishment of international trade and marketing has been extremely critical in enhancing development and growth of various economies. The aspect has enabled the participants to detect the changes alteration in the market segments.  With the rise in the cases of international trade, the MNCs have realized the need to enhancing specialization and comparative advantage. With the use of these aspects, the Asian companies have realized that the amount of competition is Western markets is relatively low. Therefore, the companies based in Asian have reached an agreement in engage in business with the western nations. The analysis of research findings from the western market shows that most of the Asian MNCs have established themselves and 56% of the respondents confirmed they entered the western market and disregarded Asian market because of overcrowding. In addition, the study conducted in the Asia reveals that 70% of the multinational firms plan on engaging in international markets through the process of mergers and acquisitions (Cherry, 2000 108). The conduction of mergers with local western companies provided the best attribute for the Asian Multinational companies to enter the western market. Acquisition is another preferred method used by the foreign companies to establish themselves in the new markets. These two channels are preferred because the new entrant gains significant percentage of the market share that is already established by the mother company. The use of these aspects of market entry has increased the success rate of the Asian multinationals by a significant margin.

The success of the Asian MNCs is also attributed to the aspect of adoption and internalization of the cultural beliefs and aspects. During the entry into the new environments, the Asian companies and employees have the challenge of engaging in significant learning of the cultural practices and beliefs that will enable them to engage in healthy completion with the other competitive companies. Since the establishment of the multinationals in the Western nations, the Asian companies have been profitable and have acquired significant share of the market. The western markets are highly developed and the Asian companies must interpret perfectly with the market demands to enhance increase in the performance of their products (Karl P. Sauvant, 2008 79-87). The aspect of market identification and integration has enabled the new entrants in the market to control significant share of the market. Notably, the success of the Asian multinationals has been associated with the adoption of globalization techniques. This entails the realization of the market needs and enhancement of the adaptation skills to satisfy the needs and wants of the market. In reality, this has been the secret of the Asian multinationals that has led to their success in the western market. Some factors leading to their success include the following.

The realization of competitive advantage

The performance of business is based on the realization of competitive advantage. The realization of competitive advantage is extremely critical for the success of business venture because it helps the stake holders to ascertain the critical strong points of the organization. The establishment of Asian multinationals has the competitive advantage of eligible top managers who ensures that the goals of the company are realized. The realization of the goals and vision of the company is largely dependent on the strategies adopted by the top managers of the organization. In this regard, the analysis of market records shows that the top managers Asian firms and MNCs have advanced experience in the enhancement of the organizations performance (Kiichiro Fukasaku, 2000 231). One aspect leading to this is their ability to interact with the employees and other managers. Communication in an organization is extremely beneficial because it enhances the performance of duties leading to the realization of customer satisfaction.

With the entrance into the western market, the top managers of the Asian MNCs were able to conduct market survey to ascertain the needs and wants of the market. Upon the entry it a new market, the MNCs are faced with both cultural and social challenges. However, the realization of competitive advantage leads to the establishment customer satisfaction and capturing of significant market share. Because of the realization of competitive advantage, the Asian multinational corporations have been able to launce competition with the western companies in their market space (Luo, 2001 96). The western companies are alarmed because of the competition threat posed by the Asian MNCs who have mastered the cultural and social aspects of the market and are able to satisfy the wants and needs of the market.

The global expansion strategies

Studies conducted on the performance of multinationals reveal that the identification and adoption if expansion strategies are factors to be consider before investing in new markets. In this regard, the Asian MNCs adopted the strategy that allowed them to expand and adapt to the cultural and social aspects of the western market. Through the use of this strategy, the MNCs have quickly adapted to the western markets that they pose significant threat to the existing market participants. The stake holders of the Asian MNCs have conducted adequate research prompting the establishment of the companies in foreign territories (Paul J.J. Welfens, 1999 163). The management of these companies also understands the needs to conduct expansion to satisfy more customers. The strategy adopted by the Asian MNCs has allowed for rapid expansion causing market threat to the western market participants. The Asian MNCs have adopted the merger and acquisition technique that has enabled them to acquire ongoing businesses with an established set of customers. This strategy of acquisition and entry in the market has been conducive for the MNCs because it has enabled them to enter the market and control significant market share by providing more commodities and services to a great number of market users. In addition, the use of merger and acquisition has enabled the Asian MNCs to access the feedback for the market and make improvement on the brands (Paul J.J. Welfens, 1999 85). In business, feedback is extremely beneficial because it enables improvement of commodities or services and enhances customer satisfaction and creates brand loyalty.

The expansion of the Asian multinationals corporations in to the western markets has been driven by the desire to attain market integration. The survey conducted by the World Bank classifies the Asian market as comprised of developing economies while the western market is classified as developed economies (Wendy Dobson, 1997 208). In this regard, expansion of the Asian companies into the western market will lead to their integration. In addition, the expansion of the Asian companies have also been caused by the need to remain to competitive by adopting market knowledge and strategic assets like raw materials and technological knowhow (Sang-Gon Lee, 1999 95). Other factors leading to expansion includes the needs to access both organizational and managerial skills that are largely available in the western market. Other the western market, the Asian companies has been able to evolve and control significant share of other markets from different continents like America, Australia and Africa. The adoption of merger and acquisition strategy has been extremely beneficial in enhancing the performance of the Multinational corporations (Sang-Gon Lee, 1999 108). The representation of the activities of the MNCs is depicted by the chart below.

From the above illustration, it is evident that the European market has remained the most targeted market by the Asian multinational corporations.

Cultural adaptation

Over the period, various multinational companies have established the western market as a viable and profitable market but the MNCs have take significant amount of time to establish themselves in the market (Theodore H. Moran, 2005 106). However, the survey conducted on the region has revealed that the Asian multinational corporations took significant amount of time to study and understand the market. The marketers of these multinational companies understood the need to analyze the cultural and social dimensions of the market (Shahid Yusuf, 2004 37). The conduction of market survey and analysis is extremely beneficial because it enable the participants to understand the complexities of the market. In addition, the proprietors are able to define methods of a adapting to the market. In this regard, the conduction of the survey was beneficial to the Asian MNCs because it assisted them in drafting a make shift program for capturing the market.

Studies have shown that other multinational corporations from other regions failed to capture significant market share of the western market because of the amount of time they took to invest in the market. Upon realization of the cultural aspects of the market, the Asian multinational corporation ventured into the business of providing goods and services to the market (Tsang, 2002 219). Through the establishment of strong globalization strategies, the Asian MNCs played significant role in the establishment and enhancement of the western cultures.

Majority of the Asian MNCs originally expanded to the new markets through green field then proceeded to form joint ventures with the existing firms. This aspect enabled the MNCS to study and understand the complexities of the market. The depiction of future strategies to be used by the Asian MNCs shows that they will use a combination of all the techniques to attain significant market share in the western markets.

Retreived from (Aswathappa, 2005)

 In order to enhance satisfaction of consumer wants and needs, the establishment of the MNCs was done through acquisition and merger so that delivery of commodities could not be interrupted. This aspect of globalization has enabled the Asian MNCs to be on the forefront on the establishment of MNCs and the realization of profitability of market venture (Yip, 2000 74). In addition, this aspect has enabled the Asian multinational companies to control significant share of the western market.

Conclusion

Over the period, the rise in technology has enhanced the development of globalization where nations can trade on a global perspective. In view of market expansion, Asian multinational companies have been able to expand to the other segments of the global markets. An example is the western market where multinational companies controls significant share of the market. The Asian corporations have been able to conduct globalization because of the globalization strategies they have adopted. Analysis shows that they observe the cultures and the social practices of the consumers and initiate methods of satisfying the needs of the consumers. Another criterion for their success is the usage of mergers and acquisitions. The method of acquisition has been successfully used by the MNCs to establish significant share of the market in the western where the activities of the multinationals has gradually increased. The improvement in communication and telecommunications has enhanced expansion and globalization of Asian MNCs. This has occurred because the company policy makers are able to leverage the external business networks to ascertain the existing opportunities and risks associated with the entry into a new market.

References

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