Essays on Internationalization Process f Firms from Emerging Markets Case Study

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The paper "Internationalization Process оf Firms from Emerging Markets" is a perfect example of a business case study.   The number of multinational enterprises from developing countries has been on the increase over the recent past. Many of such firms have established subsidiaries abroad and therefore engage themselves in large scale foreign direct investment in both developed and developing economies. The move by the multinational enterprises to expand their operations abroad is to some extent attributed to the fact that structural economic changes may have taken place in their domestic economies.

Great focus will, therefore, be directed to multinational enterprises from the Latin American countries. It is therefore important to note that indeed, the first emerging markets multinational enterprises operated in natural resources as opposed to multinational enterprises from developed economies who dealt in large scale manufacturing of goods. The multinational enterprises from emerging markets had a common characteristic as most of them got support from their respective states based on their exporting advantage which served to maintain a favorable balance of payment for such governments. Apart from government support, these firms from emerging markets enjoyed such advantages as access to natural resources and low labor cost. The need by such firms to obtain new technology and vast knowledge to meet new customer needs may also be a contributing factor to the growth of multinationals enterprises from emerging markets.

Initially, the recipients of the expansion in terms of internationalization by such multinational enterprises were other emerging markets in the same geographical and cultural domain (Johanson & Vahlne, 1977, 22). These markets were viewed as less risky as compared to developed markets where the technologies used were superior hence making survival for new entrants difficult. However, there are models developed to explain the process of internationalization of firms from emerging markets.

These theories strive to give a vivid perspective of the main directions taken by firms that sought to expand their operations in other economies. There are three such theories that seek to explain the process of internalization of firms from the emerging economies. The internationalization models are incremental internationalization, the eclectic paradigm of international production and the accelerated internationalization model. The incremental internationalization model explains the behaviour of emerging markets firms of starting operations in the countries which they have fewer difficulties in establishing and running the business.

These firms then proceed to countries where they have more difficulties upon being more psychically distant. In this respect, the firms start with exports followed by the establishment of sales units and finally setting up subsidiaries as a form of foreign direct investment in foreign countries. This is done progressively as such firms from emerging market acquire managerial advantages and technologies as a result of operating globally hence making them able to withstand foreign competition while at the same time striving to maintain their domestic market share.

This model is therefore still relevant as far as understanding the growth and development of multinational enterprises from emerging markets.

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