Multinationals need to adapt their strategy to compete with local companies, says MIT Sloan Management Review article co-authored by Peter Williamson of Cambridge Judge.
Not long ago, there were widespread worries that multinational companies were going to take over the world, but “something strange” is now happening: strong local companies are beating multinationals and especially in emerging markets, says an article in MIT Sloan Management Review co-authored by Peter Williamson, Honorary Professor of International Management at Cambridge Judge.
Professor Peter Williamson
For example, despite decades of investment, Unilever and Nestle had by 2013 won market shares of only seven per cent and five per cent, respectively, in China’s ice cream market, which is dominated by two Chinese companies largely unknown to the wider world whose market shares are 14 per cent and 19 per cent. The same pattern is seen in many other sectors including retailing, home appliances and laundry detergent.
The article in the Summer 2015 issue of the magazine – entitled “The new mission for multinationals” – says that multinationals can’t simply rely on the formula perfected in their home markets.
Instead, they should either “build on their foreignness” the way Levi Strauss sells a “piece of American lifestyle,” or integrate locally by becoming embedded in local distribution, talent and regulatory networks – and such local integration will require mind-set changes in executives based in both headquarters and those local markets.
The article is co-authored by Jose Santos of INSEAD and by Peter Williamson of Cambridge Judge Business School.