A STUDY ON MNCs’ METHOD FOR ENTERING EMERGING MARKETS

A STUDY ON MNCs’ METHOD FOR ENTERING EMERGING MARKETS

Aman Tripathi

Guide: Dr Rashi Mittal

BBA(Business Analytics)

SCHOOL OF BUSINESS STUDIES

GALGOTIAS  UNIVERSITY, GREATER NOIDA

INTRODUCTION

A multinational corporation (MNC) is a company that has business operations in at least one nation other than its home nation. By some definitions, it also brings forth at least 25% of its revenue outside of its home nation.

Generally, a multinational company has offices, factories, or other installations in different countries around the world as well as a centralized headquarters which coordinates global management.

Multinational companies can also be known as international, stateless, or transnational corporate organizations or enterprises. Some may have budgets that surpass those of small countries. Some may consider any company with a foreign branch to be a multinational corporation. Others may confine the definition to only those companies that derive at least a quarter of their revenue outside of their home nation.

Multinational companies can make direct investments in foreign countries. Many are based in developed nations. Advocates say that they create high-paying jobs and technologically advanced goods in countries that otherwise would not have admittance to such opportunities or goods.

Multinational corporations (MNCs) play a monumental role in the global economy, seeking opportunities for expansion and growth in various markets globally. When entering a new market, whether it is an emerging market or an established one, MNCs need to employ effective strategies to establish their presence and achieve success.

The process of how MNCs emerge in a market involves several key steps. Firstly, thorough market research and analysis is conducted to identify the potential markets and assess their attractiveness. This includes evaluating market size, growth potential, competitive landscape, regulatory environment, and cultural considerations.

Based on the market assessment, MNCs devise their entry strategies. These strategies involve decisions on the mode of entry, like exporting, licensing, joint ventures, foreign direct investment (FDI), or acquisitions. Each mode of entry has its advantages, challenges, and suitability based on factors like market characteristics, company-specific resources and capabilities, and risk tolerance.

Once the entry strategy is ascertained, MNCs set out the process of establishing their presence in the market. This involves conforming products or services to meet local preferences, establishing distribution networks, forming partnerships with local firms, and building relationships with key stakeholders. MNCs may also need to navigate through regulatory requirements, legal frameworks, and cultural nuances specific to the target market.

Throughout the process, MNCs face various challenges, like cultural differences, regulatory complexities, political and economic risks, competition from local firms, and infrastructure limitations. These challenges require MNCs to be flexible, adaptable, and responsive to changes in the market environment.