Unit 8: The New Multinational Companies (MNCs) PDF

SECTION 4 Unit 8: The New Multinational Companies (MNCs) Internationalization of Businesses: Management and Strategies (EUS) Maite Ugalde Enríquez Contents 1. Multinational companies from emerging markets (“Emerging Multinationals”) 2....

SECTION 4 Unit 8: The New Multinational Companies (MNCs) Internationalization of Businesses: Management and Strategies (EUS) Maite Ugalde Enríquez Contents 1. Multinational companies from emerging markets (“Emerging Multinationals”) 2. The phenomenon of the “globally born” 3. Family owned multinational companies *Images in these slides have been downloaded from the internet for teaching purposes. They are property of third parties. 2 Contents 1. Multinational companies from emerging markets (“Emerging Multinationals”) 2. The phenomenon of the “globally born” 3. Family owned multinational companies 3 1. Multinational companies from emerging markets (“Emerging Multinationals”) MNCs that are registered and based in emerging markets, with their origins in these fast growing economies that have expanded around the world as key acts in global FDI and cross border acquisitions Characterised by a rapid growth and very fast pace towards internationalization. Also known as: emerging MNCs, emerging market firms, 3rd world MNCs, unconventional MNCs. The new multinationals scored lower on technology, marketing skills, organizational overhead, scale, capital intensity, and control over foreign subsidiaries than their ‘rich’-country counterparts. 4 1. Multinational companies from emerging markets (“Emerging Multinationals”) 5 1. Multinational companies from emerging markets (“Emerging Multinationals”) 6 1. Multinational companies from emerging markets (“Emerging Multinationals”) Emerging country MNCs have to manage the fact of being latecomers to the international markets; their marketing and technological skills and resources start from a weaker position. This position represents a common disadvantage, one which they share in contrast to established MNCs from the advanced countries. 7 1. Multinational companies from emerging markets Bimbo Group - Mexican company in the global baking industry. - Founded in 1945 in Mexico City. It has become one of the largest food companies in the world. - Internationalization process of Bimbo Group has been gradual and strategic: - Expansion in Latin America: In the 1960s and 1970s, Bimbo Group initiated its international expansion focused on Latin America (e.g. Guatemala, Costa Rica, El Salvador, and Venezuela), establishing a presence through acquisitions and strategic partnerships. - Entry into the United States: In 1996, the U.S.-based company Mrs. Baird's was acquired by Bimbo, headquartered in Texas. - Key Acquisitions in the United States: Brands such as Entenmann's, Thomas' English Muffins, and Sara Lee, allowing the company to consolidate its presence in the U.S. market and expand its product portfolio. - Expansion in Europe: In 2011, the company acquired the Spanish company Panrico, marking its entry into the European market. Further expansion in countries such as Spain and Portugal. 8 Source: https://grupobimbo.com/en/investors 9 10 Contents 1. Multinational companies from emerging markets (“Emerging Multinationals”) 2. The phenomenon of the “globally born” 3. Family owned multinational companies 11 2. The phenomenon of the “globally born” Digital business models foster “globally born” MNC (aka Born Global) Definition: what are global born MNC? In academic terms, globally born are those that reach a certain level of internalization between year 3 to 5 Characteristics - Usually linked to a digital business model all along the consumer experience - Competitive advantage origin - Digital consumer experience usually allows to optimize costs and is able to attract worldwide talent 12 2. The phenomenon of the “globally born” Airbnb - Online platform that facilitates the rental of accommodations between individuals worldwide. - Founded in 2008 in San Francisco, California. - Initial Domestic Growth: - Focus only on the U.S. market, where it quickly expanded. - International Expansion: Airbnb started its international expansion in 2011. - Key: to meet local cultural and regulatory needs (translating the platform into multiple languages, adjusting payment and security policies, collaborating with local authorities to comply with regulations, etc). - In some cases, it acquired local competitors and similar platforms in different regions has allowed the company to consolidate its position in specific markets more effectively. - Current diversification: local experiences, activities, and the ability to book restaurants, aiming to become a comprehensive travel platform. 13 2. The phenomenon of the “globally born” 14 Contents 1. Multinational companies from emerging markets (“Emerging Multinationals”) 2. The phenomenon of the “globally born” 3. Family owned multinational companies 15 3. Family owned multinational companies Family owned companies that grow to become MNCs Definition: Family owned multinational are MNCs as we know them, that have at least 51% of the share capital or their equity held among the family members directly or through family companies, trusts or holdings Characteristics Private capital and family owned companies; the shareholders are family members that control decision making of the company Succession is a key issue to manage Competitive advantage origin Control and decision making → Family protocol 16 3. Family owned multinational companies Examples Internationally known Novartis → Sandoz family Roche → Fritz Hoffmann Oeri Walmart → Walton family Oracle → Ellison family Spanish MNCs that are family owned Grifols → Grifols family Puig → Puig family Inditex → Ortega family The World's 21 Biggest Family-Owned Businesses (businessinsider.com) 17 3. Family owned multinational companies Cargill Cargill is a private, family-owned American multinational company operating in the agriculture and food sector. Founded in 1865 by William W. Cargill in Iowa. Origins and National Expansion: Cargill began its operations as a grain mill in the Midwest of the United States. ○ First, national expansion → getting involved in various areas of the food supply chain, from agricultural production to marketing. Diversification of Activities ○ This includes meat, dairy products, oils, and other products related to agriculture. Entry into International Markets in 1950s ○ The company entered international markets through strategic acquisitions and partnerships, establishing its presence in Europe, Asia, Latin America, and other regions. ○ As of 2016, Cargill operates in 70 countries across six regions around the world Cargill has maintained its status as a family-owned business over generations. The Cargill still plays a big role in decision-making and the strategic direction of the company. Despite being a large, global company, family management has influenced the culture and long-term orientation of Cargill. 18