Competing with Giants: Survival Strategies for Local Companies in

Emerging Markets
By Olivier Palacios Vzquez

Nowadays it is common to see new business building on local markets. Although, the sense of
developing new local companies is needed of effective competing strategies which can provide
them enough ability to compete with the multinational companies coming-in and obviously, to
provide them a successful growth and support finding their strengths and drawing on them.
The many effects caused by rhetoric globalization in markets behavior such as barriers
crumbling made global companies search for new opportunities for growth and expansion in
local companies field; drawing on a rich body of information, management skills and wide
appealing on their products, bringing local business survival at stake.
The fact is about how these local companies can face this invasion and how they use this
situation to overcome their differences with competitors from advanced industrial companies
without die in trying. It is usually thought there are three ways to respond to this:
1. By calling on the government to reinstate trade barriers
2. By becoming a subordinate partner to a multinational
3. By simply selling out and leaving the industry.
Nevertheless, events around the world make evident that abovementioned strategies are
not the only existing in spite of being thought as the more appropriate. There are companies
in Latin America, Eastern Europe, and Asia which have adopted successful tactics to defend
themselves against global companies threat and have even built on strength at home and
launched international expansion strategies of their own. How did they do that?
First of all, as local managers, there are two questions that we need to address: First, how
strong are the pressures to globalize in your industry? Second, how internationally transferable
are your companys competitive assets? By understanding the basis for competitive advantage
in our industry, we can better appreciate the actual strengths of multinational rivals. And by
assessing where competitive assets are most effective, we can gain insights into the breadth
of business opportunities available.

The pressure to globalize is caused by the nature of the product offered. If the industry
develop technology as automobile industry or electronics, global pressure will be higher than
one in which traditional clothes or food are produced, It means that in first situation there are a
higher level of costs for equipment, marketing, and distribution which need to be covered. So
that this type of industry needs to sales on multiple countries to cover this costs and then the
pressure to globalize is going to be high as well.
On the other hand, in local industries dedicated to produce clothes, food, etc. the success
turns on meeting the particular demands of local consumers. So the companies compete on
the basis of well-established relationships with their customers and global pressure is not as
high as in global industries.
International sales bring some advantages, but adapting to local preferences is also
important. By thinking about how much global pressure is required by industry operations,
managers from emerging markets can begin to get a brief picture of the strengths and
weaknesses of their multinational competitors. Once they understand their industry, managers
need to evaluate their companys competitive assets and decide if one of them could bring them
opportunities for growth and expansion or whether they must beef up and defeat themselves
developing new competitive assets.
These two parameters (the globalization pressures in an industry and the degree to which
a companys assets are transferable internationally) can guide strategic thinking. If globalization
pressures are weak, and a companys own assets are not transferable, then, the company
needs to concentrate on defending its turf against multinational incursion. We call a company
employing such a strategy a defender. If globalization pressures are weak but the companys
assets can be transferred, then the company may be able to extend its success at home to a
limited number of other markets. That sort of company is an extender.
If globalization pressures are strong, the company will face bigger challenges. If its assets
work only at home, then its continued independence will hang on its ability to dodge its new
rivals by restructuring around specific links in the value chain where its local assets are still
valuable. Such a company, may be called a dodger. If its assets are transferable, the company
may actually be able to compete head-on with the multinationals at the global level. We call a
company in that situation a contender.

In conclusion, using any of the proposal strategies does not mean that industries must
restrict their operations scope to fit exactly as abovementioned, though, as a local manager it
is important to be aware that facing global challenges is not easy and it is necessary to array
strategic to ensure company survival and success. It is necessary breaking the paradigm of
thinking on globalization as an exclusive feature of success, otherwise thinking in competitive
assets knowledge as a strategy to compete effectively and slowly become in a stronger, healthy
industry able to face global challenges.

Literature

Dawar, N., & Frost, T. (1999). Competing with Giants: Survival Strategies for Local Companies in Emerging
Markets. Harvard Business Review.