Question by Bryce Carter on Apr 8, 2014
Q. I notice many MNC's that do very well in emerging markets, but do not have a very solid presence in their country of origin. How important is it to have a strong home foundation from which to build from for EMNC's?
Almost all the EMNCs we studied for our book had a strong presence at home before expanding internationally. This is because a business needs to have a strong foundation in its home market before going abroad to iron out the bugs from their business model, develop capabilities that can provide it with a competitive advantage, have the financial resources to expand, and the like before taking on the challenges that internationalization naturally poses.
If you look at the international business literature, this is equally true for MNCs. Of course there are exceptions to this general rule. Consider for example the Indian IT players like Infosys–one of the companies we studied–which from the beginning had their key markets offshore. The Infosys founders were all working in the US and came to identify an opportunity there which they felt they could capture by setting up a business back home in India where there existed a talent pool of top notch software engineers whose salaries were a fraction of those in the US.
The key to the success of Infosys and other Indian IT players like TCS and Wipro was the development of the so called global delivery model. You can read more about that in my case study on Wipro.
This gave them capabilities such as