| The End of Corporate Imperialism; 10.1 Article Review by Marc Kleinman | |
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| Tweet Topic Started: Aug 2 2012, 02:19 AM (92 Views) | |
| mjkleinm | Aug 2 2012, 02:19 AM Post #1 |
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Marc Kleinman IU Kelley School of Business D594 Article Review 10.1 8/1/12 In Prahalad and Lieberthal’s The End of Corporate Imperialism, the authors make a compelling case for an ecosystem of globalizing businesses and emerging markets that will no longer support the phenomenon they define as ‘corporate imperialism’—the perspective that leads organizations (particularly Western multinational companies) to view emerging markets as ‘targets’—masses of consumers invariably yearning for modern goods and services—rather than the uniquely idiosyncratic and dynamic populations that emerging markets actually are. The authors argue that the major global corporate brand expansions of 20 years ago (think Coke) are just that—a thing of the past—as multinational companies increasingly recognize the importance of the emerging market’s middle class as a driving force behind acquiring adequate traction in the new market. As in most scenarios, I believe that the optimal strategy for globalization in emerging markets (and, of course, there is no single, optimal strategy for any business growth scenario) lies somewhere between the two extreme ends of the spectrum—corporate imperialism on the one end, and an entrepreneurial sort of adaptation on the other. It stands to reason that in the last 2 decades—where dramatic improvements in technology and connectivity have changed not only the landscape of commerce but also the strength of voice of even the tiniest cultures, communities, interest groups and entire nations—the relative importance of an emerging market’s idiosyncrasies would increase by an order of magnitude. This is a notion that is clearly connected to the topics we addressed in the previous discussion section related to globalization and the recognition of institutional voids. The strengths and weaknesses (and by extension the opportunities and threats, though not necessarily respectively) of an emerging market are in its institutional capacities and voids. I argued in the previous section that a company’s ability to recognize the institutional voids themselves in an emerging market is perhaps not as important as its ability to trace those voids clearly back to its own institutional needs and reliance thereon. The optimal strategy lies somewhere in the middle of the road between imperialism and adaptation largely as a result of this convergence of institutional needs and institutional capacities and/or voids. The needs of the expanding organization, to an extent, represent its current vision, identity and operational solution—among those characteristics which, under former circumstances, may have been extended to (thrust upon) an emerging market as an out-of-the-box commercial solution. Similarly, a company’s comprehensive analysis and understanding of an emerging market’s institutions and institutional voids is in many ways representative of its willingness to adapt to the infrastructure and core competencies of a new market while filling the voids associated with other institutional ‘blank spaces’. More to the point, it is the organization’s willingness to shape its strategy around the idiosyncrasies of the emerging marketing that most closely tie to the adaptive end of the spectrum. While these adaptive opportunities will be important in achieving success and identifying potential ‘red flags’ in emerging markets driven by an expanding middle class (operating at much lower price points than those in more developed markets), it will also be critical to maintain a strong corporate identity during globalization that has been long associated with what Prahalad and Lieberthal have dubbed corporate imperialism. It is becoming more and more evident that the key to a successful globalization campaign is an mastering the balancing act—balancing central authority with autonomous managers, balancing a global brand with a portfolio of market-specific products, balancing corporate imperialism with adaptive expansion, in addition to countless other concerns that will weigh in on one side or the other of this scenario. In this author’s opinion, Prahalad and Lieberthal come out too strongly on one side of the issue—advocating the strength of emerging market identities over the established operational and cultural practices of the expanding firm as the critical factor in globalization. Instead, this author would be inclined to take a slightly more conservative approach that calls for multinational corporations with successful and established brands to retain their brand and identity to the extent possible, while infusing local interests and competencies to strengthen and optimize a new program in an emerging market. |
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