Generic Strategies of India's Emerging Multinationals

Ravi Ramamurti, a professor at Boston’s Northeastern University, traces some of the paths Indian companies have taken to reach MNC status in a paper titled, “Generic Strategies of India’s Emerging Multinationals.” In the paper, Ramamurti says that he hopes that “bringing these generic strategies into sharper focus, and highlighting the organizational demands and strategic dilemmas each is likely to present, will be helpful to managers as they take their companies global. The generic strategies identified here are not unique to India and have relevance for MNCs from other emerging markets as well. As a group, however, these generic strategies are unlikely to be pursued by firms in advanced economies because they are rooted in conditions peculiar to emerging markets, such as low-income consumers, low-wage workers, high-growth domestic markets, and under-developed hard and soft institutions.

Ramamurti identifies four generic strategies of emerging MNCs – which he stresses are not mutually exclusive and may be combined or ordered in a variety of ways – to which they attribute the success, the growth, and ultimately the ability to move onto the global stage, demonstrated by a small but growing number of Indian companies. These are: Local-Optimizer, Low-Cost Partner, Global Consolidator and Global First-Mover. He then goes on to sketch the elements that comprise each strategy, the conditions that facilitate implementation, and examples of companies – or sectors – which have successfully pursued the strategy.

Emerging markets in countries like India have a number of unique characteristics that make them crucibles for innovation. Ramamurti pointed to three issues: Experience with a low-income customer base; a low cost business model – “these companies have to be not 10% or 20% cheaper, but 50%, 60%, 70% cheaper”; and risk management experience on a scale totally different from that familiar to companies in more developed countries.