Second Topic
According to Mathews (2006), what
strategy do firms from emerging Asian economies take to catch up with firms
from advanced economies? If you were hired as a CEO of a firm based in an Asian
emerging economy, how would you take this strategy to develop your firm into a
“dragon multinational”?
Matthews
(2006) highlights the "latecomer advantage" strategy adopted by firms
from emerging Asian economies, leveraging technology transfer, innovation, and
partnerships to narrow the competitiveness gap. Newcomers and latecomers in the global arena haven't secured their
position by replicating incumbents' strategies. Instead, they've crafted novel
approaches focused on containment, encirclement, and collaboration. By becoming
indispensable contractors and suppliers to established players, they've forged
mutually beneficial relationships, paving the way for their growth and success.
Assuming the role of CEO in a firm
situated within an emerging Asian economy with aspirations of evolving into a
“dragon multinational”, my strategic roadmap would encompass the following
steps:
1.) Thorough Market Analysis: Perform detailed assessments
of target markets to pinpoint lucrative opportunities and potential challenges,
utilize market intelligence for strategic decision-making, prioritizing market
entry strategies based on insights gained. The Global Financial Crisis (GFC) emphasized the importance
of increased regulatory oversight of the financial sector. This need arose due
to the significant harm inflicted on individuals, as well as the threat to the
stability of the entire financial system.
2.) Procuring and
Integrating Technology:
Embrace a proactive stance on technology acquisition, utilizing the latecomer
advantage to promptly embrace cutting-edge technologies. Foster an environment
of innovation within the organization, empowering employees to consistently
pursue novel ideas and approaches.
Enterprises with robust technology assimilation capabilities
generally experience notably positive outcomes from technology acquisition.
Conversely, when enterprises struggle with technology assimilation, the
anticipated positive impact of technology acquisition becomes challenging to
realize.
3.) Establish Strategic Partnerships and Alliances: Cultivate strategic collaborations with prominent global enterprises,
facilitating the transfer of technology, exchange of knowledge, and access to
markets. Engage in partnerships with research institutions, industry
associations, and governmental bodies to leverage synergies and foster
collective growth. In China, as in many other nations, the concept of private
ownership plays a crucial role in fostering wealth creation and enhancing
productivity. However, to stimulate economic growth, the Chinese government
permits a hybrid model of private-public ownership. While the government
retains ownership of the land, various forms of private ownership are
encouraged to drive productivity growth in key economic sectors.
4.) Human Capital Development and Capacity Building: Allocate resources to initiatives nurturing a skilled workforce for
innovation and competitiveness. Implement comprehensive training programs,
mentorship opportunities, and knowledge exchange platforms to foster continuous
learning and skill refinement. As per study by Sethi,
N., Mishra, B.R., & Bhujabal, P., that both market size and financial
development not only contribute to the formation of human capital but also that
human capital enhances market size and strengthens financial development.
5.) Market Diversification and Expansion:
Implement a strategic approach to expand into diversified markets, targeting
various geographic regions and industry sectors. Mitigate risks stemming from
market volatility and regulatory uncertainties by maintaining a well-balanced
portfolio across different markets and business segments. The fundamental
principle of internationalization process theory posits that firms
progressively obtain, assimilate, and apply knowledge regarding foreign markets
and operations. This underscores that the accumulation of knowledge serves as
the primary driver of the internationalization process model (Johanson &
Vahlne, 1977). This knowledge accumulation aids in mitigating uncertainties
arising from unfamiliar environments and enables firms to fully leverage
opportunities.
6.) Corporate Social Responsibility (CSR)
/ Brand Building and Reputation Management: Adopt CSR initiatives to bolster the company’s reputation and
brand presence globally and showcase dedication to sustainable and ethical
business standards, aligning with the preferences of socially aware consumers. In the contemporary era, consumers place significant emphasis on
societal concerns and anticipate that corporations will operate not solely for
profit but also to mitigate the adverse effects of diverse crises, encompassing
natural disasters, economic downturns, epidemics/pandemics, and human errors.
Scholars in the field of Corporate Social Responsibility (CSR) underscore
myriad advantages associated with CSR initiatives for socially responsible
enterprises. These benefits include heightened levels of customer satisfaction,
enhanced consumer loyalty, strengthened affinity with the company, elevated
levels of consumer trust, bolstered corporate and brand reputation, heightened
brand preference, and increased intentions for purchase.
a. Alignment of Values: Both brand building
and reputation management often involve communicating an organization’s values
and commitments to its stakeholders. CSR initiatives are one-way organizations
demonstrate their commitment to these values, whether through environmental sustainability
efforts, community engagement programs, or ethical business practices. Aligning
CSR activities with brand values can reinforce the authenticity of the brand
and enhance its reputation. CSR
initiatives offer a pathway to accessing valuable resources, enhancing
marketing communications effectiveness, and fostering the attraction and
retention of high-caliber employees. These strategic advantages, coined by
scholars as "profit-maximizing CSR," can be translated into tangible
financial benefits for organizations.
b. Impact on Reputation: CSR initiatives can
significantly impact an organization’s reputation. Engaging in socially
responsible activities, such as philanthropy, environmental conservation, or
fair labor practices, can enhance the positive perception of the brand among
consumers, employees, investors, and the broader community. Conversely
neglecting CSR or engaging in unethical practices can damage the brand’s
reputation and erode consumer trust. In the face of ongoing globalization, the approaches taken by firms
regarding Corporate Social Responsibility (CSR) are being subject to scrutiny
from both academic circles and industry professionals. Recent global challenges
have intensified the demand for firms to prioritize the triple bottom line
encompassing people, planet, and profit. The fundamental impetus driving CSR
strategies is the adoption of business practices that yield mutual benefits for
both the firm and the communities in which they operate.
c. Risk Mitigation: CSR initiatives can
also serve as a form of risk mitigation for organizations. By proactively
addressing social and environmental issues through CSR efforts, organizations
can prevent potential reputational damage and build resilience against crisis.
Effective reputation management involves not only promoting positive aspects of
the brand but also addressing any concerns or criticisms transparently and responsibly.
Orlitzky and Benjamin (2001)
discovered a negative correlation between risk and corporate social
performance. They suggest that companies engaging in proactive CSR activities
can anticipate and mitigate potential business risks, including those arising
from governmental regulation, labor disputes, or environmental harm.
7.) Agile Organizational structure and
governance:
Foster an agile organizational structure characterized by decentralized
decision-making and streamlined communication channels. Embrace a culture of
accountability and transparency, ensuring alignment with strategic objectives
and fostering a sense of ownership among employees. Organizations
aspire to attain their goals by fostering coherence, congruence, and
consistency in their strategic endeavors, characterized by agility. This is
facilitated by adept leadership and management, harnessing the capabilities of
a highly engaged workforce within an adaptable and responsive organizational
framework.
8.) Continuous Performance
Monitoring and Evaluation:
To evaluate the effectiveness of
strategic initiatives, it's crucial to establish a robust performance
monitoring and evaluation framework. This framework should rely on key
performance indicators (KPIs) to systematically track progress, pinpoint areas
for improvement, and facilitate the adaptation of strategies in accordance with
evolving market dynamics.
In the realm of HR best practices, a distinguishing factor contributing
to the success of the most admired companies lies in their approach towards the
development of their personnel. Unlike conventional methods where this
responsibility is solely shouldered by HR departments, these companies
decentralize it across all busicltness lines, involving line managers in the
process. Notably, managers at these firms dedicate a significantly higher
proportion of their time to managing and developing their teams compared to the
average across all companies. This underscores the effectiveness of an
operations-oriented, manager-driven approach to talent management.
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