globalization

globalization

While Freidman (2007) argued that globalization has caused the world to become flat blurring the globe into a homogenous culture. However, the truth as we see today may in fact be quite different as seen in the case of most MNCs that expand across the globe and into emerging countries experience the diversity and differences when having to deal with nations around the world. The understanding of these diversities correctly and employing the right managerial team and approach is of great importance to MNCs as their success in these markets depends on it.

The approaches that an MNC from a developed country can employ for expansion in emerging markets

Emerging markets are characterised by a number of cultural peculiarities that MNCs of the developed world are not familiar with. These peculiarities penetrate several aspects like consumer preferences, employee interaction and expectation, relationship with the stakeholders as well as government policies. In order to be able to understand the local tastes and practices, it would be beneficial for employees to hire local talent as they would be the instrumental in not only bringing in the local perspective for consumer preferences but also helping in locating cheap resources. In emerging countries the high level of bureaucracy could bring impediments to the growth and success of companies. Employees and manager from the local countries would have a better grasp of being able to deal with such issues and developing relationships on common footing with local governments would help mitigate these concerns (Pelle, 2007). It would therefore seem reasonable to hire local talent in the setting up of operations in emerging countries. Hiring locally also gives the employees a greater sense of ownership and therefore the motivation to ensure the success of the business unit in the country (Das, 1993).

However, as MNCs require need to achieve their objectives and vision without compromising the values that form the foundation of the company. In order to do so an MNC could have an expatriate manager from the home country to set up the initial operation and ensure that the team in the emerging country is well versed with the parent company’s values. This aspect becomes even more important in emerging countries that have high levels of corruption and malpractices. In such situations the expatriate manager selected for the task has to have a high level of cultural understanding or cultural intelligence (Rose et al, 2010) to successfully work in culturally diverse environments to capitalise on opportunities while achieving the global objective of the company.

MNCs also have the option of hiring an employee from a third country towards setting up their operations. This option would be feasible if the person is required for a specific task that he/she specialises in. Under other circumstance this option may not necessarily be appropriate as a third person may not understand and empathise with either the MNCs goals or the specificities of the target market but might be a professional in certain task related activities.

Social opportunities and challenges of developing local talent

Emerging markets have a large pool of talent in the working age bracket as compared to most developing countries. As the quality of the talent in emerging countries improves with relatively lower salaries in this market, MNCs cannot ignore the benefits that arise from training the local talent. Local talent have the insights into the local market that could unlock opportunities based on their local knowledge. Their understanding of the local markets can bring innovation creations in terms of creativity, advertising, distribution and business models that MNCs could apply in other emerging markets or even in developing markets. Collaborating with local educational facilities could help MNCs have a pool of talented people that are crucial to growth at relatively cheaper salaries as compared to hiring expatriates. Also the involvement of MNCs towards bettering levels and quality of education could help them gain goodwill and social in the local environment and pave the way for future expansion.

Nevertheless the challenges that MNCs face is that with the local talent developing expertise they could move to competitors in search of higher salaries and opportunities. Another important challenge that companies face in training local talent is to prepare them to think in terms of a global perspective. While local talent would be experts in their own environment in order to elevate their ideas and thought process to a global arena, MNCs should provide opportunities to the local talent to work in diverse environments to be able to think out of the box.

Conclusion

Local talent holds the potential towards a number of benefits for MNCs in emerging markets. However in order to harmonise the opportunities in the local market with the long-term objectives of the company it is necessary the right training and development is provided.

 

References

Che Rose, R., Sri Ramalu, S., Uli, J. & Kumar, N. (2010) ‘Expatriate performance in international assignments: the role of cultural intelligence as dynamic intercultural competency’, International Journal of Business and Management, 5 (8), pp. 76-85 (Online) Available from: http://ccsenet.org/journal/index.php/ijbm/article/view/6908

Das, G. (1993) ‘Local memoirs of a global manager’, Harvard Business Review, 71 (2), pp.38-47, Business Source Premier (Online) Available from: http://ezproxy.liv.ac.uk/login?url=http://openurl.ac.uk.ezproxy.liv.ac.uk/?title=Harvard+Business+Review&volume=71&issue=2&spage=38&date=1993

Friedman, T. (2007) ‘Is the world flat?’, Foreign Policy, 160, May/June, p.4 (Online) Available from: http://sfxhosted.exlibrisgroup.com.ezproxy.liv.ac.uk/lpu?genre=article&isbn=&issn=00157228&title=Foreign+Policy&volume=&issue=160&date=20070501&atitle=Is+the+World+Flat%3f&aulast=Friedman,+Thomas+L.&spage=4&sid=EBSCO:Academic+Search+Complete&pid=

Pelle, S. (2007) Understanding emerging markets: building business BRIC by brick. London: Sage
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