Key Lessons From Asia Pacific Multinationals

After studying all lectures and case studies on Asia Pacific Multinational, your aim for this report is to summarize the key lessons you drew in the form of a dated note or diary for at least 5 Asian Pacific Multinationals.

You should assess in turn four topics, namely strategy, corporate organization, core capabilities, and the role of government.

The firms to be analysed are:

1. Secom – Japan
2. Mitsubishi Corporation – Japan
3. Toyota - Japan
4. Samsung Electronics - Korea
5. Huawei Technologies – China

When preparing your answer, please read, investigate and analyse the following four aspects for the MNEs and its country of origin:

• Strategy
• Corporate organization
• Core capabilities
• The role of government

Consider a number of perspectives, including the aims of Japanese multinationals in relation to global strategies; the aims of Korean and Chinese multinationals and international business strategies; differences between industries and types of business; the degree of global versus regional control, and changes in operational control over time; the competitive advantages of these multinationals compared to those of rivals; variations in management, organization, and operations between home country and host nations; the ability of Japanese, Korean and Chinese multinationals to compete in Europe, Asia and North America, and their ability to adapt to changes in policy and markets; and the policies of host governments and the relevance of the EU.

On analysing Asia Pacific multinationals, and their strategies, corporate organization, core capabilities, and government role, the following is a relevant guide and must be consulted.

R Fitzgerald and H Rui, ‘Whose fall and whose rise?: lessons of Japanese MNCs for Chinese and emerging economy MNCs’, Asia Pacific Business Review, 2016, vol.4. The article and journal are available on line through the college library service, and on the Moodle course page.

R Fitzgerald and C Rowley, Multinational Companies from Japan : Capabilities, Competitiveness, and Challenges, London, Routledge, 2015 will also be useful.

Toyota - Japan

Asia Pacific region developing countries are contributing towards global multinationals. In this report, five Asian Pacific multinational firms will be analyzed which include Secom, Mitsubishi Corporation, Toyota, Samsung Electronics, Huawei technologies. For these firms four aspects would be further discussed, that is the global strategies that are aimed by Chinese, Japanese and Korean multinationals, corporate organization, core capabilities of a firm compared to their rivals, and role of government in their operations to compete in Asia, EU, and North America. Large MNC’s has contributed to national FDI with volume in outward FDI and inward, which has influenced by multinationals (Dekios, 2016).

Toyota is a major MNC of the Japanese automobile industry, and that has become competitive through its product development, high skill levels, product quality, and lean production. The Toyota internationalization strategies involve manufacturing operations overseas; the company views Europe as a single market from 1990, and to obtain vertical integration and production strategies the company adopted regionalization policy (Fitzgerald & Rui, 2016). By 1995, fur plants were outright by Toyota in North America, moving its international strategy to market seeking FDI from protecting its export trade. In 1967, the company assembles plant in Thailand, In 197, a joint venture in Indonesia and in 1975 partnership with car assembly in Pakistan (Heijltjes, 2015).

Toyota Motor Europe was one of the development incorporated in 1990 at Brussels in order to promote vertical integration and secure European companies regional oversight. To improve region-wide coordination merger was conducted within marketing and manufacturing divisions in 2005 within Toyota Motor Europe. ‘2010 Global Vision’ was a programme designed for growth in volume, sales, and profit by integrating management and system and reinforcing its worldwide. Toyota had invested in R&D overseas and remains dependent on resources and management of the parent business (Murakami, 2017).

Greenfield subsidiaries, direct control strategy was preferred by Toyota for entry global market that the production methods, competitive management to its subsidiaries overseas. Main company’s production department provided strong direction. The Toyota institute that was founded in 2002 to gain a competitive advantage with high skill level, provided Training, and development for managers and executives from all over the world. Toyota has competitive leadership in cross-border supply chain and production management. Therefore, the core capabilities of the company lie with the product development and highly skilled human resource (Kawai, 2018).

The Japanese government has implemented an intricate system of policies to promote cooperation with large firms and industrial development, after the Second World War the state has developed manufacturing sector of selected products to enhance industries productivity. Moreover, the ministry of finance and ministry of international industry and trade regulate the industry and provide finance cheap for selected industries in manufacturing. The government granted permission for components and raw materials where overseas investment are involved or cost is reduced in industries with labor-intensive use (Waldenberger, 2017).

Taiwan Secom.co., offers various security services, majorly focus on online security systems. The company made debut overseas in 1978 and operates in twelve countries. High-quality services are provided overseas to earn market acceptance steadily. Through expansion strategy in Southeast Asia, the company provides a security system and static guard services, which fulfill the needs of customers in Malaysia. Moreover, in Indonesia, it focuses on the cities of Surabaya and Jakarta (secom, 2018).

Mitsubishi Corporation - Japan

SECOM was initiated in 1962 in Japan. A countrywide infrastructure was built with the launch of the first home security system. The company maintained contracts with 1,279,000housholds and 1,046,000 corporations until March 2018. The international operations consist of offices in nineteen countries expanding into Korean, Malaysia, Vietnam, India and many more (Lehmberg, 2015).

A distinguish feature that the company offers overseas is “SECOM-style-online security system” that includes emergency services to respond, customization is offered to reflect sensibilities and local needs. The quality product and customized as per the demand is making core capability of the company (Nakamura, 2017).

The government plays an important role in the growth of the company in Japan. In2006, “new economic growth strategy” pursued to identify strong growth potential industries and to improve competitiveness. The strategy is focused on innovation and development of SMEs and large firms for preferring making their strategic decisions own. Improving and maintaining the competitive industry of Japan explaining 2/3^rd JBIC’s loan and equity commitments from2013 (Felicio, 2015). Joint ventures had a common way to enter in developing markets, and because of governmental policies, risk perception, and parental control was not that much pronounced in developed economies European and US business attempted to upgrade the falling competitive spirit by imitating management methods of Japanese. JMNCs had to acknowledge expanding or maintaining the place they had established in regional markets or foreign markets (Lee, 2018).

In 1971, Mitsubishi Shoji Anglicized its name to “Mitsubishi Corporation.”  Mitsubishi Shoji was one of the general trading companies in Japan that dominated the country’s import and export trade. The company strategy involves the procurement of components and raw material that is required by Japan to industrialize during the 1950’s and 1960 and includes the export of manufacturing products. The operations were focuses through economies of scope and economies of scale. The company from 1968, worked on LNG production in Brunei as a first main overseas investment and it developed plantation, food production, mining interest, and forestry worldwide. According to UNCTAD, world investment report 2012, Mitsubishi Corporation is one of the largest multinationals worldwide and occurs in the top 100 non-financial TNC’s (Jiang, 2018).

Mitsubishi Corporation strategic plans in 200 and 2003 were consolidated into six business groups and regional headquarters were greater autonomy overseas over business decisions and local talented employment. Their attempt includes reforming centralized and hierarchal managing resource associated with enterprises of Japan with long histories. Since the majority of the business of the company was remained domestic, the bank’s branches overseas remained controlled by the parent business and by the management of Japan (Motoyama, 2016).

Core capabilities against its rival include, sales maximization policies and fully comprehensive services were provided rather than profit testing for all commercial activity conducted. It had become more indulged in consultancy, business solutions, IT, project management, communication, investments, venture capital, supply chain management, and technology acquisitions.  Mitsubishi Corporation has focused on its unique combined international market knowledge, capital and marketing, and international logistics. These core capabilities help the organization in gaining competitive advantages (Rowley, 2015).

Secom - Japan

The international success depends on a firm’s capabilities and strategies but recognizes the backing received from the government. From 1999, the attention was given preference to mergers and acquisitions, technology- seeking over licensing. Undertake tariff-hoping guarantee and substantial Japanese incentives were offered to Japanese manufacturers. “Japan Export-Import Bank (JEXIM),” owned by the government was established in 1953. The institutions state to support private sector operations and finance to secure policy like improving the competitiveness of Japanese industries and SME’s, accessing raw material, and avert international financial disorder. Japanese business leaders expressed their government official’s appreciation while being domestic politics and more skeptical (Hong, 2016).

The global strategy pursued by Samsung electronics includes product diversification by offering products like mobile phones to a new level, at multiple sizes and prices. This allows the company to target different income groups and different customer needs. Through vertical integration, the company is able to reduce cost by having microchip production and using glass. The approach of the company is “follow first, innovate second” to create a competitive position in other product areas except for smartphones. Samsung most vital regions to be covered are Europe, Asia, and North America (Saberi, 2018).

Samsung group companies functioned as a supplier for Samsung Electronics. The core components were imported from Korea initially but later on, joint ventures or owned subsidiaries were set up but the Samsung group suppliers and began to produce in local areas or nearby locations. The local supply chain was established to maintaining stable relations with local suppliers. The company also established headquarter, in China in 1995 and became one of the most significant locations for global business (Park, 2017).

Core capabilities if Samsung electronics to gain a competitive advantage over competitors include product development for all income group customers with high-end technology being used. for example one of its major competitor in the Asian market is Apple.inc in smartphones and some other electronics like laptops. The Samsung consider the size and price of the product by providing various range of phone with a various range of prices whereas Apple I phones are majorly focusing high-income groups (Jackson, 2016).

Heavy and chemical industries were on the priority list for the government during 1980’s and a strict licensing arrangement was they're leaving only on some specific companies like Samsung. Throughout post was an era of construction many ‘Chaebols’ like Samsung builds a close relationship with government. Since Samsung help to rebuild the Korean economy, the government enables them to be more profitable and grow stronger through tax breaks, reduced export rates, cheap bank loans, and allocation of foreign material. Moreover, the government reduced the rate of credit interest (Pham, 2018).

Huawei initiated the wireless communication research, in 1995, and spend a huge amount that in 3G, which he believed was necessary. By 2005, Huawei was one of telecom equipment makers among few in the world to provide 3G products and systems. It gradually became the world leader in wireless research. Innovative products and technology by the company lead it to enter and again substantive market shares in a hundred countries and more. A Huawei strategy is to offer customized products to adjust to the conditions of the BOP (Bottom of Pyramid), and demands of a lower income group. The company has sustained long-term strategy, which includes winning global markets, where CNPC held both corporate interest and government M&Ate in securing natural resources (Lee, 2018).

Samsung Electronics - South Korea

The hierarchal structure was common among CMNCs where managers of a subsidiary of the company were imbued with the goals and values of Parent Corporation and consist of extremely centralized bureaucratic control. The ‘top-down vertical management lines’ were specific that includes country subsidiary head to regional subsidiary head to corporate head at the top. Both formal and informal mechanism was included which consist of ERP management system as formal and personal visits and monitoring subsidiary heads as part of informal. Huawei considers the centralized structure to ensure quick decision-making and responds to market and a huge number of inexpensive expatriates (He, 2017).

Huawei core capabilities include customized stations of its telecom networks to use sonar power resources available locally and therefore reducing operating costs. Reduction in operating cost lead to offer lower price and gain competitive advantage (Guo, 2018).

The Chinese government is more likely to follow the models of the Japanese government. Moreover, the Chinese government is more focusing on attracting foreign firms and considers joint ventures and focus to exchange technology among the market. Chinese firms faced the consequences of this model, as they obtained outdated or second-hand technology and do not install R&D capability independently. According to Chinese MNCs managers, the government support was unsystematic, not sustained at times and was indiscriminate (Ding, 2018).

Conclusion

To conclude this report, the Asian Pacific multinationals has grown or rise a lot. This has taken through five MNCs cases for which the internationalization strategy includes expansion, product development, was included, corporate organization of the MNCs of Japan, China, and Korea. Moreover, the government plays an important role in the rise of the MNCs in Europe, Asia, and North America’s regions. According to large MNC’s perception, the Japanese government is appreciated for the rise of the companies. The Chinese government is majorly following the model of Japan to expand their MNCs in Asian regions.

References

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