Thesis (MBA)--Stellenbosch University, 2014. / ENGLISH ABSTRACT: With developed economies experiencing slow growth, multinational corporations (MNCs) in various
industries are looking to tap into the enormous potential of emerging economies. By identifying
emerging markets as future markets, MNCs can increase their market share and profits, and grow
through a diversified strategy that focuses on unconventional markets and customers with
unserved needs.
However, MNCs entering these markets cannot succeed by simply transferring business models,
products, and services developed for mature economies as the needs of the new consumers in
emerging markets require innovative and non-traditional business models and approaches.
The research question for this study is to investigate if and to what level MNCs have to adapt their
business model when entering or expanding their operations to emerging markets. Therefore,
research has been done on four MNCs across a diverse range of industries. For collecting data,
the research made use of a qualitative case-study research approach and is based primarily on
findings from four in-depth interviews with strategy or marketing experts from MNCs across
industries. Further information was obtained through deep research on publicly available
information about the company. The research aimed to identify similarities in the business model of
successful pioneers and to analyse common principles that could be of use for other MNCs when
planning to enter unknown emerging markets.
The interviews were conducted personally, telephonically, and via email. In a next step, the
interviews were transcribed and common themes were extracted and combined with findings from
further research. For collecting and ordering the information, Osterwalder & Pigneur’s (2010)
business model canvas was applied. Finally, the findings were grouped, formulated and compared
to existing literature in order to identify similarities, common principles or differences for new output
propositions.
The primary finding of the research was that specific factors, such as the difference in market
conditions and environments, as well as in consumer preferences and needs, strongly influence
the design of business models. A key differentiating factor was the choice between keeping
traditional business models with a focus on global and centralized systems, processes, brands and
products or designing business models that are adjusted or innovated to meet local market
conditions and consumer trends.
Another key finding was that a balanced portfolio of brands is a critical factor of success in
emerging markets. To reach different market segments in emerging markets, MNCs need to offer
mainstream as well as premium brands, all based on a strong brand identity and brand values. The
partnership with local business partners and key stakeholders was identified as fundamental to be able to react to local business environments. Furthermore, the integration of local suppliers and
communities, as well as the adjustment of the value chain to the local environment, has been seen
as a key factor to reduce costs while gaining acceptance and building close relationships with the
local community.
In order to overcome local challenges of institutional voids and lacking knowledge in emerging
markets, the research has shown that a collaborative strategy with local partners is of high
importance.
The research showed that MNCs with global brands follow both approaches. While some MNCs
maintain a traditional business model for all its markets, other MNCs design their business model
based on standardized systems and processes to the local environment. In terms of the level of
innovation, it can be said that none of the researched MNCs showed an extremely high level of
innovation. Common principles and activities that could be identified in the business model design
for emerging markets between all researched MNCs, are as follows: (1) balanced portfolio of
strong brands, (2) strong partnerships with local key stakeholders, (3) loyal relationships with
consumers, (4) an efficient and cost-effective value chain, and (5) collaborative partnerships or
acquisitions as a critical market entry strategy.
| Identifer | oai:union.ndltd.org:netd.ac.za/oai:union.ndltd.org:sun/oai:scholar.sun.ac.za:10019.1/96220 |
| Date | 12 1900 |
| Creators | Mehler, Anja |
| Contributors | Burger, Johan, Stellenbosch University. Faculty of Economic and Management Sciences. Graduate School of Business. |
| Publisher | Stellenbosch : Stellenbosch University |
| Source Sets | South African National ETD Portal |
| Language | en_ZA |
| Detected Language | English |
| Type | Thesis |
| Format | xii, 140 p. |
| Rights | Stellenbosch University |
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