Sample: Implementation Of International Business Strategy, Linkage Effect
2.3 Linkage Effect Of International With Local Players
MNCs are increasingly using strategic orientation in lieu of conventional controls to monitor the operation of foreign subsidiaries and to perform managerial governance. Strategic orientation is an efficient mid-range instrument linking global integration with local responsiveness (London and Hart, 2004). Compared to control and coordination, strategic orientation arrangement is the least direct, least costly, and has the longest or most sustained effect. The global strategy literature asserts that the alignment of an overseas subsidiary with its environment is critical for international expansion because competition in the global marketplace occurs at the business unit level (Ghemawat and Hout, 2009). There is a linkage between a firm's strategic profile and its external context, and this linkage has significant implications for international performance in an uncertain context. While conducting business operations in international environment it is important for foreign firms to collaborate with local firms of the industry so as to gain knowledge of the external environment and seek ways to adapt itself to the business environment of the host country (Pangarkar and Wu, 2006)).
It has been argued by Jansson (2007) that several previous studies that tremendous advantages are enjoyed by MNC firms over the local firms and the interest of local firms can be served best through avoidance of a head-to-head competition. Here it is also to be noted that MNCs in order to have a profitable and sustained business in an international environment requires to collaborate with the local players. Such linkages with local players also help in determining the required internal environment of the firm as expected by the workforce of the host country while working in an MNC (Reddy, 2008). It has been argued by London and Hart (2004) that in emerging country markets like China and India, R&D; is generally dominated by the Western multinational organizations whereas the local players in these country markets are winner in businesses where logistics or production savvy is the key. However, it has also been suggested the MNCs can break this pattern through competing on the basis of cost and developing unconventional partnerships with local players (Ghemawat an Hout, 2009). This can also be done through using local knowledge for creation of targeted offerings at home and can parlay core strengths while acquisitions are made in overseas markets. It is clear that in both the cases MNCs can break the pattern and be successful through some linkage with the local players of the industry or using local knowledge as the competence (Hsu and Boggs, 2006).
There is a need to be more responsive to local customers if MNC is to be established and run successfully. This needs to be done keeping in mind that there should be no loss of advantages of the global know-how. Pangarkar (2002) further suggests that aspiring MNCs may have to face several challenges due to inexperience in cross border operations which can be overcome through tapping the expertise of giants through linking with them. Such collaborations help in gaining extensive knowledge of the markets and the prospective customers which further proves to be helpful in spotting opportunities to bundle ancillary services and products in which the international company may have the advantage.
- 2.1 Introduction
- 2.2 International Business and strategy
- 2.2.1 Environment of international business and its significance
- 2.3 Linkage effect of international with local players
- 2.4 Internationalization in emerging country markets
- 2.4.1 Major strategic issues for multinational corporations
- 2.4.2 Fundamental business problems
- 2.5 MNC operations in Indian markets
- 2.6 Summary
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