Managerial Challenges Facing
Old and New Multinationals
Ravi Ramamurti
Northeastern University
Session on:
COST Panel session on Emerging Country Multinationals
37th EIBA Annual Conference, Bucharest, Romania
December 9, 2011
The Challenge
• Old MNEs—how to win in emerging markets
while retaining the lead in developed
markets?
• New MNEs—how to build presence in foreign
markets while retaining the lead at home?
• Each has to learn different things to succeed
Old MNEs
Traditional Approach
Demands of Emerging Markets
Strategy
 Optimize products for Triad markets
 Cutting-edge, technologically sophisticated,
performance-rich products
 Premium price, high-margin orientation
 De-feature global products for emerging markets
 Target premium segment in EMs
 Best solution for EM customer
 Frugal, functional, good-enough quality
 Low price, high-volume orientation
 Zero-based innovation
 Target mid-market segment in EMs; create
market if necessary
Organization
 Centralized strategy and new-product
 Decentralized strategy and new-product
development, by global product divisions
development
 EMs play “implementer” role, including COEs
 EMs innovate for local market, using capabilities
that develop products for Triad markets
of global product divisions
 EMs measured on sales and order taking
 EMs measured with suitable metrics, and DC
 ‘Exploitation’ mind-set for emerging markets
subsidiaries roll-out low-cost products from EMs
 ‘Exploration’ mind-set for emerging markets
Source: Adapted from Govindarajan & Ramamurti, Global Strategy Journal, 2011
New MNEs
• Building international presence: Why do it, and how?
(Ramamurti & Singh 2009)
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How to move up the value curve?
How to plug competency gaps?
How to staff the growth, and create a global mind-set?
Professionalizing management (vs family control)
Integrating foreign acquisitions
Profitability, through the “loss valley”
How to remain independent and viable?
Who will win the learning race—
EMNEs or DMNEs?