Business Integration and Strategic Planning.edited

Competing with giants: how local companies can survive in emerging markets
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Many local companies all over the World have found it tough in the recent past owing to an influx of multinational companies thanks to the crumbling of protectionist barriers. The major reason for this is that governments have started to favor free trade as opposed to protectionism as the driver of economic growth. Local companies, however, regard the arrival of multinationals as the end of their business. They can’t simply compete with the seasoned management and marketing skills, powerful brands, superior products, advanced technology, and finances wielded by the companies. However, this does not necessarily have to be the case. If these local companies employ good strategies, they can maintain their initial share of the market. The following are some of the strategies they can employ:
1. Utilizing their home advantages to serve a certain niche of customers
While many people are attracted to foreign products, many still maintain their liking for only local products. A company may choose to focus on this consumer niche to maximize its sales and earnings. Having been in the market for long, it may have various advantages over foreign companies how may try to wrestle it from this niche. These include a good understanding of the local preferences, existent customer relationships, and expertise in local products. One such company is the Chinese-based Tencent which has maintained the lion share of the social media market due to an understanding of local behavior (Thompson et al.

, 2016).
2. Explore shortcomings in the available distribution networks
At times, the existing the existing media, telecommunication systems, and distribution networks do not favor the foreign firms who have no clear understanding of how to make the best out of them. This happens mostly when these systems are underdeveloped, and the multinationals can’t, therefore, employ their models which can only work in developed markets. The local companies should outdo the multinationals in these circumstances.
3. Utilize aspects of the local workforce that the multinationals may not be familiar with
Local companies do not necessarily have to be intimidated by the multinationals’ technological capabilities. They can make use of the existing labor to compete with the firms. Chinese and Indian firms have largely been successful in utilizing their cheap labor to compete with large multinationals. One such company is Focus Media, an outdoor advertising firm which relies on many employees who physically change advertisements instead of relying on the electronic auto display of messages. It is currently the country’s largest outdoor advertising firm.
4. Extending their expertise abroad
Local companies can decide to extend their advantages by moving to new markets that have similar characteristics to their home base. This may be regarding government regulations, distribution channels, geographic proximity, and consumer preferences. One of such companies is the Televisa, which utilized its experience in Spanish linguistics and culture to become the best producer of Spanish soap-operas in the World (Thompson et al., 2016).
References
Thompson, A. A., Peteraf, M. A., Gamble, J., & Strickland, A. J. (2016). Crafting and Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases (20th Ed). New York, NY: McGraw-Hill