Multinational Enterprises From Asia Pacific: Rise And Growing Role In Global Economy

Discuss about the Multinational Enterprises from Asia Pacific.

With globalization, the firms in the Asian subcontinent have got the platform to expand across the globe. It can be said that globalization has been beneficial for the large and mid-size firms in Asian region (Black, 2010). The three major economies of Asia are Japan, China and India. The companies in these three countries have been able to operate at a global level. For example, Toyota is one of the market leaders in automobile industry. Samsung is also a global player with good presence in almost every country (Schaper, 2007). There are a lot of Japanese firms in electronics industry. The objective of this paper is to discuss the rise and growing role of multinational enterprises from the Asia Pacific in the global economy.

Daft (2015) implies that although a company may be in a dynamic environment, the impact of the environment has minimal effects on the organization. This could also imply that management is able to better predict and focus attentions where environmental impact is greater. Sharma (2000) implies that management’s attitude towards outside influences play a huge role in how subordinates see outside influences in relation to the organization as well. For those companies that are successful, the success could be attributed to how well management has developed strategies to mitigate potentially server environmental impacts (Amsden, 2001).

As leaders work to move their organizations into the global economy, they must adapt to the open-system. Daft (2015) states, “No Company can go it alone under a constant onslaught of international competitors, changing technology, and new regulations” (p.181). The type of organization, profit, or non-profit can both benefit from collaboration with their external environments. The successful expansion of Asian companies in global environment could also be attributed to the use of open systems and the transformation from closed economy to open economy (Buck, 2005).

Asia pacific or APAC is the part of the world in or near the Western Pacific Ocean. The region varies in size depending on which context, but it typically includes much of East Asia, South Asia, Southeast Asia, and Oceania. This region can be shown as:

Most of the countries in Asia pacific regions are developing countries and in fact, the transition from developing nations to developed nations have a key role to play in the development of Asia pacific region (Yamazaki, 2007). The globalization has been good for the corporations as well end consumers. In fact, the benefits delivered to end consumers are one of the biggest drivers of globalization (Fitzgerald, 1995). It can be said that the end consumers across the globe gets benefited from the expansion of the firms in the Asian region (Thoburn, 1990). For example, the expansion of Toyota in America put a pressure on American car manufacturer to reduce their prices (Fitzgerald, 1994). The increase in the globalization and the reduction of the trade barriers set the platform for tough competition across different industry verticals.

Drivers of growing role

Using Taylor’s scientific management theory along with the incorporation of modern contemporary decentralization strategies, organizational leaders can develop a fused design that is relevant to the current global market. MacLean (2012) suggested that leaders find balance between the strict formalization of centralized design and the ambiguity of decentralized design to create a fit for the organization that is the most beneficial and delivers optimum return toward meeting organizational objectives (Fitzgerald, 2005). The rise of the multinational companies could be attributed to number of internal and external drivers of change. The internal factors or internal attributes result from the internal passion of the organization. For example, the large companies like Toyota and Samsung were passionate to expand themselves at a global level. The external factors are the environmental factors that enabled the Asian organizations to put their mark on a global map (Silvestre, 2012). For example, the penetration of Internet and the ease of political factors across the globe.

Taylor stressed standardization and efficiency throughout scientific management however; the modern day organization continually places an emphasis on multi-tasking as a mean to improve efficiency and productivity.  Organizations become flatter and leaner in the efforts to eliminate the wastes that distract workers when trying to accomplish more than one task at a time (Brennan, 2011).   Sanford professors Eyal Ophier, Elliot Nass and Anthony Wagner found more mistakes were caused with the information overload with the stress and distractions than those who performed single tasks (Brennan, 2011).  As individuals are expected to accomplish more with less available resources, it is often wonder are organizations too lean at times and overloading individuals in the pursuits of profits.  There are various reasons that accounts for the growing role of multinational enterprises from the Asia Pacific in the global economy. These reasons or the drivers can be discussed as:

The countries in APAC region are developing countries. On the contrary the countries in the western world are already developed. Therefore, there is more scope of innovation led development in APAC region as compared to the developed nations.

A difference is observed in the business strategies and business actions of organizations in developed nations and organizations in developing nations (Rodrigues, 2005). This difference is also evident in the same organization across different regions. For example, Microsoft has a more open and flexible culture in American offices as compared to its office in Hyderabad (India). Recently, Facebook also opened its office in Hyderabad. However, the companies, have the strategy to take the cost advantage of Indian region.

In the 1990s a huge social gap was observed between the developed nations and the developing nations (Tan, 2007). There is always a motivation in the APAC region to bridge this social gap. This has been made possible with the forces of globalization and international marketing.

It would be correct to say that technology and technological factors have emerged as a key platform for the firms on APAC region to expand globally. This expansion might not be possible without the presence of technology enablers. With the use of Internet and social media platforms, the global marketplace has shrunk.

Joshi, Das, and Mouri, (2015) suggest entrepreneurial orientation (EO) has disaggregated the EO construct resulting in a curvilinear relationship with innovativeness in the context of technology and organizational structure (formality) as a moderator allowing the propensity for risk taking.to further explicate the relationships with the use of knowledge based view (KBV).  Revising the dimensions of innovativeness, proactiveness and risk taking in the efforts to consider EO components all together rather than separately leading to higher levels of reactiveness and risk taking (Joshi et al., 2015) Moreover, Joshi et al., ((2015) suggest knowledge sharing is vital to the process the acquired knowledge and knowledge management process is a requisite for an organization to be innovative.   

Innovation remains a key component of organizational success and bureaucracy hampers innovation.  According, to Naranjo-Valencia, Jiménez-Jiménez, and Sanz-Valle (2016), innovation is the primary organizational factor promoting long-term success of a company.  Organizational culture can either promote innovation or stifle innovation (Naranjo-Valencia, et al., 2016).  Organizations like Dell that have been in existence for any length of time experience both side of this coin.  In the earlier stages of Dell's life cycle, formality and the resulting bureaucracy was low.  The company skyrocketed to success based on the innovative products produced by Dell.  As Dell progressed into later phases, especially the formalization stage, stratification of roles and the division of tasks and labor generated higher levels of bureaucratic red tape (Daft, 2015).  The focus shifted from innovative expansion to maintaining market share or simply maintaining the status quo.  Dell's leadership clearly came to the conclusion that Dell had lost its innovative edge.  Decline was clearly on the rise.  Dell's leadership made the reasoned decision to return to a more adhocracy structure.  Less formalized structures foster product innovation (Naranjo-Valencia, et al., 2016). 

Sony is one of the biggest competitor of Dell in the Asian region. Sony is Japanese company that is known for its high quality electronics products (Khang, 2012). The comparison of Dell and Sony reveals that Dell is trying to set cost leadership as it’s competitive advantage in the Asian market and Sony is trying to set ‘differentiation’ as its competitive advantage in the Asian market (Deng, 2007).

For many years, organizations were closed systems and only used influences and resources from inside the organizational system.  Then in the 1960’s open systems were created which was the concept that the organizational system opened up to use influences outside of the independent organization such as governmental, academic, and private company influences from the environment (Mansor and Tayib, 2013).  Open systems were sought out for use being that it allowed the independent organization access to many differing sources of influences that was seen to be useful.

Leser (2015) discussed the effects of government regulation on sports drinks in Europe. “Initially, the industry was in danger of a legislation that was so restrictive that it could have prevented growth and innovation in the sector. Today, as sports nutrition products have evolved to attend to the needs of the wider active population, the industry is now in danger of a regulatory framework that is so broad that it does not recognize the specific needs of sports people” (p. 45). Political legislation, as in this case, can be either too restrictive or not restrictive enough. This is why it is very important for organizations to stay abreast of these topics, so they are aware of what the government is considering and of what its effect will be on the business if the legislation passes (Kim, 2006). Organizations can then lobby the legislators to vote in a manner that will benefit their interests.

There are numerous examples of Asian companies that have successfully expanded at a global scale (Okubo, 2013). The open systems theory describes how an organization deals with its environment. In the open systems theory, organization is considered as a system of transformation in which the environment put the input and the organization transforms it into output for the use of the environment at a global level (Edwards, 2006). The open systems theory helps managers to enrich their conceptualization and methodologies, and by increasing the company market field, and then compete to the organization success. Some of examples of Asian companies that have expanded in global environment can be discussed as:

Samsung is a known brand in mobile phone industry. The company has been doing well at a global level. According to Collier and Esteban (1999) in a changing environment organizations must be flexible, responsive and participative. Samsung is a classic example of the company that is able to obtain a balance between flexibility, responsiveness and participative (Rui, 2008). The researchers described the shift to flexible structures focused on quality improvement and innovation created the need for participative ways of organization (Collier & Esteban, 1999). In the study the researchers analyzed participative organizational processes and how the processes support the organization’s interaction with the environment.

The automobile industry is a developed and matured industry. There are lots of players at a global level. However, in 1990s, the automobile industry was dominated by the American and European players. The established players like GM (General Motors) and Volkswagen had more than 80% market share (Karl, 1995). However, with globalization there was a considerable difference in this industry. Today, three big Asian players in the automobile industry are Toyota (Japan), Tata (India) and Hyundai (South Kora). There are more players like Maruti and Suzuki that have a good hold in the global market. Toyota is one such company that has even surpassed the established companies in terms of quality and cost (Goniu, 2013).

The outsourcing industry is another example where Asian companies have captured a great deal of market. The large and established companies in the western world have shifted to the Asian companies (Smith, 2005). The companies in Asian region have the cost advantage. This is the reason that a large number of Indian companies have captured a great deal of outsourcing industries. The three biggest players in the outsourcing industry include TCS (Tata Consultancy Services), Infosys and Wipro (Williamson, 2013).

It is observed that today Asian companies do not resist change. In fact Infosys has more than 25 offices across Europe and USA (Gupta, 2014). This suggests that Asian companies are not only targeting the domestic market but, with globalization, the companies have increased their penetration to developed markets of Europe and USA.

Conclusion

The above paper discusses the rise and growing role of multinational enterprises from the Asia Pacific in the global economy. The rise of the Asian companies in the global environment could also be attributed to the emergence and manifestations of the global crisis that confirm the business environment has become unstable (chaotic) where change is ubiquitous (Porter, 1994).  Although other perspectives can be argued, Buta, and Burciu, (2014) suggest at some point organizations need to become democratic with less hierarchical levels in an organization structure thus enticing organizations to provide the motivation, participation and adapting to market conditions with Information Technology (IT) being the catalyst for change. With the above discussion it can be said that the rise of the multinational companies could be attributed to number of internal and external drivers of change. The internal factors or internal attributes result from the internal passion of the organization (Belderbos, 2005). The external factors are the environmental factors that enabled the Asian organizations to put their mark on a global map. It is expected that the world would be more flat in the time to come and this should have good implications for the corporations in Asia pacific region (Hamilton, 1997). The power of globalization has only increased in previous few decades and it is expected that the globalization would continue to have a deep impact on people, governments and corporations.

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