Innovation Strategies of Multinational Companies from Emerging Countries

Question: Innovation is one of the most important driving forces for multinational company’s
sustainable growth. For multinational companies from emerging countries, how they make efforts to
increase their global innovation capabilities and keep sustainable competitive advantages in
overseas competition? How do you think of their existing innovation strategies?
Our topic
Innovation is one of the most important driving forces for multinational company’s sustainable
growth. For multinational companies from emerging countries, how do they make efforts to increase
their global innovation capabilities and keep sustainable competitive advantages in overseas
competition? What do you think of their existing innovation strategies?
We will be showcasing 3 different multinational companies from 3 different geographical regions:
Mexico’s America Movil, China’s Huawei and South Korea’s Samsung.
Innovation- What is it?
Before we talk about how these companies manage their innovation capabilities, it is important for us
to understand what is meant by innovation, specifically sustained innovation that leads to long term
competitive advantage. Sustained innovation involves having a high-productivity work
environment where an organization strives to innovate in all its business aspects including
divisions, management, customers, operations, and suppliers. The innovation process is
trending in emerging economies with a collectivist culture, where their social values are
changing and the environmental pressures growing. In response, the means to act smarter is
provided by new technologies and innovative solutions where through sustainable
development, there is an organized framework of opportunity and respect for human values.
Mexico- America Movil
Background Information
America Movil is a market leader of integrated telecommunications services in the Latin America
region, with a net worth of $57.8 billion USD in 2017 (Forbes, 2018). Through the acquisition of
other industry giants such as Telmex, Telcel and Claro, America Movil today controls 66% of
Mexico’s wireless subscribers market, ranking as the 4th largest global company in terms of wireless
subscribers outside of China (statista, 2018). The company holds a monopoly in Mexico’s
telecommunications industry due to lenient government regulations. This is possible since they’re
branded as Mexico’s most valuable company by generating large revenues for the government
through company taxes, thus providing them with high bargaining power against the local
government. Although America Movil holds a solid foundation on the Latin American
telecommunications industry, their success is solely driven by one crucial factor: AMBITION. Their
ambition to provide better services for customers. Their ambition to constantly improve their
operations, and their ambitions to become global market leaders.
What makes them successful?
Without a doubt, innovation is key for a company to maintain long-term sustainable growth. The
company accomplishes this through several methods such as their Pay TV service, which is equivalent
to Australia’s Foxtel; large area coverage for their 4G networks and fiber-optic broadband access.
Additionally, innovation within the business’s operations are equally as important to keep up with
growing consumer demands upon expansion. This is primarily seen in company infrastructure, such as
growth through acquisition of other companies and upgrades in technology systems to streamline
processes required to transfer information from the home country to offshore subsidiaries.
However, a large part of this company’s global success is due to their ability to ADAPT to different
markets. As you can see in the diagram, around 80% of the company’s innovation strategy falls under

the adaptation profile rather than focusing on new product and service lines. They also ensure that
these strategies are complex enough to address different market needs, whilst also making it hard for
competitors to imitate. For example, to cater to middle class consumers in countries such as Puerto
Rico and Brazil where watching television is a popular leisure activity among consumers, the
company introduced their Pay TV service for consumers at a low prices, taking into consideration of
their disposable incomes. In contrast, this service isn’t introduced to developed markets such as the
United States, where internet streaming is used more commonly. America Movil doesn’t own any
wireless telecom facilities in the U.S. either. Instead, the company opted to purchase airtime through
agreements with wireless service providers, which saves time and financial costs. This is possible
since the U.S. already has a developed telecoms industry, which makes it easier for the company to
establish their market foothold.
Source: (WeAreInnovation, 2014)
Their strategies- What we think
Overall, we give America Movil’s innovation strategies a 4.5/5. Due to the nature of the industry, it is
not easy for America Movil to frequently come up with new innovations. In most scenarios, the
company is simply forced to follow technology trends and upgrade according to suit their operating
environments. Through research and experimentation, they recognized this limitation and has chosen
to focus on adapting to local markets, addressing different market needs. For instance, less developed
markets such as Ecuador would not find a need for fibre-optic networks, whereas in the U.S. the
company would have to invest in this to be competitive in the industry. Rather than simply acquiring
host countries’ telecom businesses, they could further improve and seek to be a global market leader
by considering partnerships, or possibly acquiring companies that specialize in technology
development.
https://www.forbes.com/companies/america-movil/

https://weareinnovation.org/2014/09/16/global-challengers-innovation-styles-and-complexity/
http://www.americamovil.com/sites/default/files/2018-04/2017-annual-report-on-form-20-f_0.pdf
How have they diversified the company?
They offer telecommunications services in other countries around Latin America as well such as
Colombia, the subsidiary being Claro. Claro in Colombia holds 57% share of wireless subscribers in
its domestic market.
The company operates under Claro in the majority of Latin America and the Caribbean, some of the
countries being Argentina, Peru, Paraguay, Puerto Rico, Jamaica, Brazil.
America Movil also owns 30% of KPN in the Netherlands and is currently negotiating 100% of the
shares.
By doing this, America Movil has been able to diversify its services into many different markets and
solidify itself as one of the giants in the telecommunications industry. (don’t think we need?, already
got enough background info)
China- Huawei
Background Information
Huawei is a globally renowned provider of information and communications
technology, established in China in 1987. The company first saw public recognition
in the news when it announced in 2016 that its ambition is to overtake Samsung
and Apple to become the number one smartphone supplier globally. This was a bold
statement that attracted a lot of media attention since the company was considered
as a nobody at the time. With strong research and development into technological
trends and an effective stakeholder management scheme, the company innovated
various services. A good example of service innovation can be seen by how the
company helps its customers in their digital transformation. It expanded into 170
countries and regions where it has continued to register tremendous success. This
implies that innovation is one of the most important driving forces for Huawei to be
competitive throughout its global markets. Huawei is now ranked as the sixth largest
IT company by revenue. It is also considered to be the largest telecommunications
equipment manufacturer in the world. As of December 2017, Huawei’s net worth is
valued at around $27 billion USD.
What makes them successful?
The major aspect that helped the company in increasing their global competitive
advantage in overseas markets is through intensive research and development
processes, in addition to access to large amounts of financial resources. Even
though Huawei considers product innovation to be a core business objective, the
company has always made it sure that it adapts their existing product to suit the
needs of their customers in different regions. This can be seen through products and
solutions such as their Huawei 4K Hotel and their Smart Wi-Fi 4K video
transmission. So, the focus of undertaking offshore market research is to ensure
that the products with which they introduce will fulfill the requirements of their
customers. Aligning this with their budget pricing business model, the company also
ensures that newly innovated products can be sold on competitive prices by cutting
costs on production and raw materials.
Huawei has utilized technological innovation, on the basis of its research and development
department, ensuring that the company’s technological knowledge and production are up to
date. An example of this is shown through Huawei’s mobile phones, which became very
popular because of its innovative technology such as the 3D modeling capability that can
transform a photo into a printout, which is found in its high-end phones and exclusive