Globalisation Impact on Local Companies: A Research Project

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Competing with multinational companies and survival strategies for
local companies in emerging markets
Research Project
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Contents
Task 1..........................................................................................................................................................3
Research Proposal Form..............................................................................................................................3
Task 2..........................................................................................................................................................9
2.1. Introduction......................................................................................................................................9
2.2. Literature Review...........................................................................................................................10
2.3 Research Methodologies..................................................................................................................12
2.3. Data Analysis and Interpretation.....................................................................................................14
2.4. Research Outcomes........................................................................................................................20
2.5. Reflection and Recommendation....................................................................................................24
Conclusion.................................................................................................................................................25
References.................................................................................................................................................26
Appendix 1................................................................................................................................................27
Research Ethics Approval Form................................................................................................................27
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Task 1
Research Proposal Form
Student Name: ______________________ Student ID: ____________
Centre Name: _____________________
Tutor: ________________ Date: ___________________
Unit: ____________________
Proposed Title: Competing with multinational companies and survival strategies for
local companies in emerging markets
Section One: Title, objective, responsibilities
Title or working title of the research project
Competing with multinational companies and survival strategies for local companies in emerging
markets?
Research objectives (e.g what is the question you want to answer? What do you want to
learn how to do? What do you want to find out?):
The research objectives of the project are:
1. What is the impact of globalisation on local organisations in emerging markets?
2. How local organisations could compete with multinational organisations?
3. What advantages do the local companies have over multinational companies in emerging
markets?
Section Two: Reasons for choosing this research project
Reasons for choosing the project
Two main reasons behind the selection of this research topic are:
1. Globalisation has become the buzzword in the industry, but most of the people are not
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aware about the actual benefits of globalisation and how it has changed the world. Hence,
I intend to analyse the different elements of globalisation and their impact on the
performance of the business organisations so that I will have the proper understanding of
globalisation.
Globalisation has resulted in a negative impact on some of the local companies in the
emerging markets. In order to analyse the advantages and disadvantages of globalisation,
its impact on local companies in emerging markets need to be analysed which promoted
me to choose this product.
2. Along with multinational organisations, there are many good local companies that are
doing well even in this highly tenses global market competition. I should know the
approaches of these companies so that I could learn from them and use them for my
growth in professional career.
Section Three: Literature sources searched
Use of key literature sources to support your research question, objective or hypothesis:
The political, social and economic conditions have changed a lot in last 2 decades and
organisations are relying on the expansion of the local businesses across the borders. Business
organisations are investing in other countries where they think that more growth opportunities
are available. There are many factors that have driven globalisation such as increasing
competition in the local markets, limited markets, and scarcity of the cheap labour and liberal
taxation policies of the emerging markets (Archibugi and Michie, 2016). While all these factors
are there, the main intention behind the globalisation for organisations is to have a competitive
advantage. Organisations are able to expand in countries where they have good opportunities of
becoming the market leader because of the absence of other organisation that could compete with
them. But they should know that there are some local companies who already have a good and
loyal customer base (Baldwin and Martin, 2014). Multinational company might come with
resources that are huge compared to the local companies but the local companies have the benefit
of a well-established supply chain management. Local companies have a distribution channel
which is formidable and they also know the exact needs of the local consumer.
In today’s world, globalisation is not limited to international trade of goods but other services
such as tourism, advertisement, transport and Mass Communication are also included in global
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business environment.
There are two main reasons behind the increasing globalisation:
1. Operational Needs
An organisation needs resources to conduct its operations and also the consumer base to
which it could sell its products and services. Globalisation helps the organisation in
achieving these operational needs by providing latest technology across the border,
availability of cheap labour (Berry, 2017). Globalisation is also a tool for the
organisations to release their surplus production.
But if there are already local companies in the market, they could counter the entry of
multinational companies because of already established operations in the region.
2. Strategic Needs
Globalisation allows organisations to partner with other organisations and enter into the
market segments where they do not have the expertise. Globalisation also increases the
prospects of steady growth because organisations could avoid the stagnation in their local
markets and also expand their business which is crucial for growth.
When it comes to redefine the strategy, local organisations also have ways to address the
threat of globalisation. Technology is not as scarce as it used to be and the local
companies are now focusing more on this aspect of business. Along with this, local
companies are also developing alliances with each other and developing strategies to
compete with multinational companies (Borghesi and Vercelli, 2015).
Multinational business model is driven by the globalisation of the markets. The governments of
different countries now work with each other provide a global market to the organisations using
their liberal trade policies. These policies acted as tools of removing the national boundaries for
the business organisations. Now organisations find the suitable place to carry out their
productions activities preferably in countries where labour is cheap and technology required for
efficient production is available. Then these organisations look for the perfect market where they
could supply their products. Hence, globalisation has brought flexibility in organisations as they
are not liable to manufacture their product in adverse conditions and then selling the products
cheap (Buckley and Ghauri, 2018).
The liberal policies of the governments towards globalisation are not entirely against the local
companies as some emerging markets are developing strict FDI (Foreign Direct Investment)
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policies that are favourable to local companies.
Section Four: Activities and timescales
Activities to be carried out during the research project (e.g research,
development and analysis of ideas, writing, data collection, numerical
analysis, tutor meetings, production of final outcome, evaluation,
writing the report):
The research project would have the following activities:
1. Project Definition
2. Problem Statement
3. Project Strategy
4. Development of the project Plan
5. Defining the project objectives
6. Carrying out primary research
7. Carrying out secondary research
8. Data Analysis
9. Recommendation and Reflection
How long this will
take: Gantt chart is
provided in the next
section
The milestones set up for this research project are:
Milestone 1
Research Project Specification and Outline is prepared including the research design
Target Date: 2nd April 2019
Milestone 2
Literature Review is concluded
Target Date: 16th April 2019
Milestone 3
Primary Data is collected
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Target Date: 23rd April 2019
Milestone 4
Data Analysis is concluded
Target Date: 2nd May 2019
Milestone 5
Research Outcomes are presented
Target Date: 10th May 2019
Gantt Chart
Activities Weak 1 Weak 2 Weak 3 Weak 4 Weak 5 Weak 6
Project
Definition
Problem
Statement
Project Strategy
Develop Project
Plan
Project
Objectives
Conducting
Primary
Research
Secondary
Research
Data Analysis
Recommendation
and Reflection
Section Five: Research approach and methodologies
What type of research approach and methodologies are you likely to use and why? What
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your areas of research will cover:
This project will use two research approaches:
1. Primary Research
Primary research will be conducted to collect fresh data using interviews and
questionnaire. A questionnaire will be developed that would have the questions relevant
to the research topic. Similarly, interviews will be used to know the views of the subject
matter experts on the research topic. The questionnaire survey data will be collected and
analysed using quantitative methodology and outcomes will be presented in graphs and
chart form (Buckley and Ghauri, 2018).
2. Secondary Research
The secondary research will include the study of the existing researches on the topic.
Along with the published researches, the secondary research will also include the articles,
journals, books and articles to conduct qualitative analysis of the research topic.
Comments and agreement from tutor
Comments (optional):
I confirm that the project is not work which has been or will be submitted for another
qualification and is appropriate.
Agreed: ________________ (name)_______________ Date ______________
Comments and agreement form project proposal checker( IV sampling)
Comments (Optional):
I confirm that the project is appropriate.
Agreed /Disagree: (Name of the IV) Date
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Task 2
2.1. Introduction
Globalisation has halted the growth of many local companies in markets and some of them are
even gone from the market. But there are still some local organisations in emerging markets that
have successfully faced globalisation. These organisations did not only maintain their customer
base and productivity but also grew. The globalisation has provided some advantages to the local
companies that they are using to address the threats of multinational companies.
Research Topic
Competing with multinational companies and survival strategies for local companies in emerging
markets
Research Objectives
1. What is the impact of globalisation on local organisations in emerging markets?
2. How local organisations could compete with multinational organisations?
3. What advantages do the local companies have over multinational companies in emerging
markets?
Rationale of the Research
Globalisation is a phenomenon which is not correctly understood by many people. Some people
think that globalisation is going to finish the local companies in emerging markets. They have
their own thinking such as superior products from multinational companies, their huge resources,
product and service standardisation, brand value etc. But there are local companies that have
invested a lot in developing a loyal customer base in the emerging markets. These organisations
are not going to go down without fight and some of them have been doing it for some time
(Cantwell, 2016). There are organisations like Bajaj Auto in India and Alibaba in China that
have been doing well even when multinational companies have entered in their segment long
time ago. Hence, this project will focus on identifying these strategies that could help local
companies in competing with multinational organisations.
2.2. Literature Review
Globalisation has resulted in the entry of the multinational companies in the emerging markets.
These multinational companies bring latest technologies, innovative products, efficient services,
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established brands and cheaper prices with them that are always for the benefit of the consumers
in the emerging markets. Consumers who did not have many choices before the entry of the
multinational companies, now has a range of products with different features. On the other hand,
local companies relied on their existing products and same old technology that they have been
using for decades and thus faced some tough situation because of globalisation. But, even in this
scenario, some of the local companies have sustained and even grew in emerging markets which
is a surprising win of these local companies (Dreher, Gaston and Martens, 2015). These
companies survived globalisation and competing with giant multinational organisations.
While many local companies saw globalisation as a threat to their business, some of them were
able to look at the globalisation with a different perspective. Organisations that lost to the
multinational companies in globalisation either became the subordinate partners of the big
multinational companies or their entirely sold out (Gereffi and Kaplinsky, 2017). But the
companies that were able to handle this threat adopted different tactics.
When a multinational company enters the local market in emerging markets, local company
needs to look as two aspects – how much pressure is there on the company for globalisation and
whether the assets of the company are transferrable to global market?
Local companies need to understand that the entry of a multinational company in the local
market might result in a sudden drop in the sale of their products but eventually if local company
is able to maintain its asset quality and continue improving its facilities, it could be able to
compete with multinational company (Hatzichronoglou, 2016). Local companies have the home
advantage, they know their customers and their requirements, they understand the constraints of
their customers and they have been serving these customers successfully for a long time. Hence,
these local companies have edge over the multinational companies. A multinational company
that is selling standardised product might not be able cater the needs of the local people in
emerging countries because the conditions in emerging countries are very different then
developed countries (Henderson, 2014). The standard products might not be able to succeed in
emerging markets in the long run. There are also cultural differences that multinational company
will be having tough time in understanding an adopting. Hence, local companies have all these
advantages and they just need to make some changes in their business models to stay ahead in
competition.
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An example of a local company surviving the multinational companies during globalisation is
Bajaj Auto in India. In 1980, the government of India opened the auto sector for the foreign
organisations. Till this time, Bajaj Auto had the dominance in Indian Auto Market and company
relied heavily on its scooter for the revenue (Hurrell and Woods, 2017). But entry of Honda was
going to make things tougher for Bajaj Auto. There is no doubt that Honda has huge resources as
compared to Bajaj Auto, but Bajaj realised that scooter market at that time was not looking
towards a revolutionary technology and the company had a well-designed and sustainable
technology that helped it in its growth. Hence, Bajaj Auto started focusing on the ground rules of
the business and invested more in its distribution and service channels. When it came to scooters
market in India, most of the people were looking for the products that are durable, cheaper and
nearby service centres (Kaplinsky, 2015). After investing in its infrastructure, Bajaj Auto was
able to compete with Honda and even today, the company has more market share in two
wheelers market in India than Honda.
While Bajaj Defended its business by strengthening its core competencies, there are some local
companies who focus on extension strategy. These are the local companies that have assets
which they could use to transfer some of their business in other countries and then competing
with multinational companies. Extending their business into some other markets give leverage to
these local companies and also provide opportunities to grow at international level (Narula and
Zanfei, 2018). While The above two strategy have worked for the organisations that have
abilities to compete with global companies with some skill set and asset quality, there are
dodgers that look for an exit when competition becomes fierce because of the entry of the
multinational companies. In the end, there are contender local organisations that are ready for
head-on battle for multinational companies at global level. These are the local companies that are
in the market for a long time and dominated the local market during this period. Hence, they
have the ability to invest in globalisation and take on the competition.
Local integration is another strategy that local companies could use to compete with
multinational companies. A local company needs to identify the areas where it could work in
collaboration with another local company and then create a plan to develop its business in this
direction (O’rourke and Williamson, 2016). The rise of Alibaba in Chinese market is an example
of this company used local integration to compete with e-commerce giants Amazon and eBay.
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When Amazon and eBay entered Chinese e-commerce market there was no infrastructure in the
country or the growth of this industry. The use of credit card and other online payment methods
was so low that it was not easy for these multinational companies to expand their business in
China. But Alibaba decided to have a different strategy and introduced AliPay a different kind of
payment service. Through AliPay, Alibaba assured its customers that it would not release the
payment to sellers unless all the sales and performance related concerns are enjoyed and a
specific time period was also set for the same (Scholte, 2017). Alibaba partners with 42 local
banks across China to ensure the payment AliPay does not run out of funds and also partners
with China Post to ensure smooth delivery and logistics. Alibaba did not only compete but
outgrew the multinational companies in Chinese e-commerce industry.
2.3 Research Methodologies
This research project will use a combination of primary and secondary research to conduct a
research on the given topic. While secondary research would be used to evaluate the past
researches on the same topic, the primary research would help in developing a fresh perspective
on the topic (Henderson, 2014). Questionnaire is an important tool used in primary research
where every participant will be given a set of questions and their response will be analysed to
conclude the result. Similarly, literature review is used in the current research project to evaluate
the past researches on the topic.
To conduct the questionnaire, people from the below age group are included in the survey:
Age Percentage
18 to 25 31%
26 to 40 53%
41 to 55 16%
The questionnaire for the research project is provided below:
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