IBUS4560: EMMs vs MNCs - Motives, FSAs/CSAs & Internationalization

This essay provides a comparative analysis of Emerging Market Multinationals (EMMs) and Multinational Corporations (MNCs), focusing on their motives for expansion and internationalization processes. It explores the relationship between Firm-Specific Advantages (FSAs) and Country-Specific Advantages (CSAs) and how they influence the expansion strategies of both EMMs and MNCs. The essay highlights the key differences in their motives, such as EMMs' focus on improving their home country versus MNCs' global market access, and the impact of these motives on their internationalization approaches, including direct exports, franchising, and ownership models. The analysis draws upon relevant literature and case studies to illustrate the distinctions and interdependencies between EMMs and MNCs in the global market.

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Introduction
The emerging market (EMs) is the term which was developed by the International Finance
Corporation (IFC) in 1981 in order to improve the stock markets. This term is taken into
consideration by a number of organizations that works on an international level. EMMs covers
major three variables that are used in the company to identify the emerging markets. These
variables are the pace of economic growth, population standard of living and economic policies
that are adopted by the government to handle the growth of the economy and develop the living
conditions of its citizen. With respect to MNC or Multinational Corporation, it is the corporate
company that handles as well as maintain the services related to the products in specific one
country. The main aim of this essay is to elaborate the difference between emerging market
multinational and Multinational Corporation. The discussion will be made on FSA and CSA to
the motives of EMM and MNC and the outcome of these motives on the internationalization
processes will be mentioned in the essay.

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1. Relation of FSAs and CSAs to the Motives of Multinational for Expansion
The term CSAs stands for Country-Specific Advantages and FSAs stands for Firm-Specific
Advantages. The control over the process of the organization could be analyzed and elaborated
through the headquarters of the company and by its ownership controls. The country-specific
advantage comes mostly from two factors of institutional factor and endowment factor. To
increase competitive advantages, it is required by the company to focus on driving forces such as
institution, environment, and specific resources. It is required for the companies that run their
business in complex and perfect complex home market because they must have the unique ability
because they have effective benefits compared to companies that run in the host country
(Aizenman, Binici & Hutchison, 2014). It has been analyzed that there are a plenty of emerging
marketing multinationals and the sub division of the emerging market are defined below:
Resource seeking EMM: It is a vital part of the emerging marketing multinationals that ensure
the respective foreign economic activities of the resource seeking to entail the cheaper resources
for the purpose of being motivated.
Market-seeking EMM: this part has a significant impact on the performance of the company.
There are a plenty of factors that affect the expansion of the company and these are government
regulations which increase the demand of the local products.
Strategic asset seeking EMM: it is another part of the EMMs that describes a plenty of forms
use the overseas investments by considering them as a major tool for fulfilling the objectives of
the company, which are not found in the home markets.
In contrast, the multinational corporations or MNCs are considerably sub separated into three
major types:

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Parent Enterprises:
It is the major kind of the MNC that is responsible for handling the assets of the other companies
within the countries. It is the type of the company that entails of some of the well knew small and
medium enterprises.
Transactional Corporation:
These firms are famous and efficient for the purpose of fulfilling the objectives of the companies
that are spread over the world.
Foreign Affiliates:
It is another kind of MNCs that is referred to as the unincorporated or incorporated enterprise
where the investor has rights to take advantages of their investment. This foreign affiliate
comprises three subdivisions of a subsidiary, associate and branch (Williams, Alsakka & Ap
Gwilym, 2013).
The aforementioned kinds of emerging marketing multinationals and multinational corporations
have a significant relationship with a Firm-specific Assets or FSA and Country Specific Assets
or CSA. Soedarmono, Machrouh & Tarazi, (2013), represents that the role of CSAs is to
contribute to global penetration in the market which will impact the host country to invest
significantly. It has been found that the framework of the FSA and CSA is liable for giving assets
to the international companies by consideration various relevance for these EMMs and MNCs. It
has become easier for MNCs and EMMs to investigate major issues with the help of the good
relationship between them. It has been found that the CSAs of the home country of the
international corporations are handled in the term to the FSAs, which are not strong globally.

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There are certain things which needed to be considered by the company in case of expanding the
business globally because the competitive benefits of any country can lead to exports of that
country that is the major cause of them to compromise with MNCs. It has been found that that
there is a core relationship between FSAs and CSAs because when the FSAs are strong and the
CSAs are weak.
2. Difference between Motives of EMMs and MNCs
There are various factors that prove the difference between the motives of EMMs and MNCs.
Emerging markets are eventually developed with the help of the existence of emerging market
multinationals in a plenty of developed countries. Furthermore, acquisitions are a major aspect
that is the major reason of expansion of foreign direct investments or FDI in every developing
market (Ramamurti, 2012). in the context of MNCs, there are brand offices for every band which
is situated in a different place in the world which help them to coordinate in an effective manner.
The importance of both EMMs and MNCs are vital for the international markets. The major
differences between the motives of them are explained below:
Development and Disparities
EMMs are referred to be upper level of diversity across the similar geographic region. They
demonstrate various extents of development patterns, with various combinations of development
and wealth creation (Hillestad, 2011). The main motive of EMMs is to make an improvement
within the home country. On the other hand, the main motive of MNCs is to extend the business
globally and get proper access to the other markets.
Technology

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The major difference between EMMs and MNCs is the technology in which the emerging market
does not give proper attention to the expansion of the business in the global market by
considering the modern technology, on the contrary, it has been found that MNCs has a tendency
to expand the business in order to gain access to the cheaper resources along with taking benefits
of modern technologies (Jain, Lahiri & Hausknecht, 2013).
Expansion of the business in the developing countries
EMMs have the main motive to expand the business in the developing or emerging countries in
order to increase the importance of developing countries. It is due to have an effective capability
of handling the confronting environments in comparison of MNCs from the developed
economies (Blitz, Pang & Van Vliet, 2013). On contrary, the main motive of MNCs is to operate
its business in developed countries in as they desire to attain a higher level of profit and
efficiency within their business.
Skills and capabilities to handle business
It has been found that there is a lack of international experiences and language skills can become
the major cause of differences between EMMs and MNCs. In the context of EMMs, it has been
observed that most of the employees do not have significant knowledge about international firms
and different languages (Al-Najjar, 2013). On contrary, MNCs is the major player of the global
market that has an effective knowledge regarding language as well as cultural diversity.
3. Affect for Motives to Internationalization Processes of EMMs and MNCs
The internationalization is considered as a significant procedure in order to develop the major
entailment of companies within the international markets. it is required for the company to keep
consider the ability of thinking globally (Sakr & Jordaan, 2016). The affect for motives of

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internationalization process on both of them are mentioned below by considering the five major
steps:
Direct exports
It is the step in which the company is bound to sell the products in direct form without taking
consideration of any other company for developing the arrangements for them.
Indirect exports
It is the step of the internationalization process that represents the selling to an intermediary who
can sell the allocated products to the customer in a direct way or by importing to the wholesalers
in an indirect way.
Franchising
This step is considered under the internationalization process after direct exports in which the
company gets its license and gets permitted for international trade.
Shared Ownership Mode
The ownership of the company is being pooled with an organization.
Full Ownership Mode
This step allows the company to be an independent organization with internationalization.
The main motive of the EMMs or MNCs are influenced by the process of internationalization as
the purpose of the EMM is to focus on the different resources related to the international process
and expand their businesses on an international level (Moghaddam, Sethi, Weber & Wu, 2014).

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In the context of MNCs, the major purpose of these companies is to bring a success in the
business by taking consideration of the entailment of the creativity and innovation which can be
done with the help of internationalization process.
Conclusion
In the limelight of the above discussion, it can be concluded that there is the significant value of
EMMs and MNCs but world has number of MNCs in which a large number of people are
working. This essay has entailed information into three parts in which the relation between FSA
and CSA has been described. The depth analysis has been done by taking consideration of the
difference between Motives of EMMs and MNCs. At last, Affect for Motives to
Internationalization Processes of EMMs and MNCs have been demonstrated under this essay.

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References
Aizenman, J., Binici, M., & Hutchison, M. M. (2014). The transmission of Federal Reserve
tapering news to emerging financial markets (No. w19980). National Bureau of
Economic Research.
Al-Najjar, B. (2013). The financial determinants of corporate cash holdings: Evidence from
some emerging markets. International business review, 22(1), 77-88.
Blitz, D., Pang, J., & Van Vliet, P. (2013). The volatility effect in emerging markets. Emerging
Markets Review, 16, 31-45.
Hillestad, H. C. (2011). How does Multinational Enterprises from developed markets succeed in
emerging markets?. Retrived from:
http://studenttheses.cbs.dk/bitstream/handle/10417/2688/hilde_christine_hillestad.pdf?
sequence
Jain, N. K., Lahiri, S., & Hausknecht, D. R. (2013). Emerging market multinationals' location
choice: The role of firm resources and internationalization motivations. European
Business Review, 25(3), 263-280.
Moghaddam, K., Sethi, D., Weber, T., & Wu, J. (2014). The smirk of emerging market firms: a
modification of the Dunning's typology of internationalization motivations. Journal of
International Management, 20(3), 359-374.
Ramamurti, R. (2012). Competing with emerging market multinationals. Business
Horizons, 55(3), 241-249.

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Sakr, M., & Jordaan, A. (2016). Emerging multinational corporations: Theoretical and
conceptual framework. Economic Research South Africa.
Soedarmono, W., Machrouh, F., & Tarazi, A. (2013). Bank competition, crisis and risk taking:
Evidence from emerging markets in Asia. Journal of International Financial Markets,
Institutions and Money, 23, 196-221.
Williams, G., Alsakka, R., & Ap Gwilym, O. (2013). The impact of sovereign rating actions on
bank ratings in emerging markets. Journal of Banking & Finance, 37(2), 563-577.