1. Managerial Challenges Facing Old and New Multinationals Ravi Ramamurti Northeastern University Session on: COST Panel session on Emerging Country Multinationals 37 th EIBA Annual Conference, Bucharest, Romania December 9, 2011

2. The Challenge Old MNEs—how to win in emerging markets while retaining the lead in developed markets? New MNEs—how to build presence in foreign markets while retaining the lead at home? Each has to learn different things to succeed

3. Old MNEs Traditional ApproachDemands of Emerging Markets Strategy  Optimize products for Triad markets  Cutting-edge, technologically sophisticated, performance-rich products  Premium price, high-margin orientation  De-feature global products for emerging markets  Target premium segment in EMs  Best solution for EM customer  Frugal, functional, good-enough quality  Low price, high-volume orientation  Zero-based innovation  Target mid-market segment in EMs; create market if necessary Organization  Centralized strategy and new-product development, by global product divisions  EMs play “implementer” role, including COEs that develop products for Triad markets  EMs measured on sales and order taking  ‘Exploitation’ mind-set for emerging markets  Decentralized strategy and new-product development  EMs innovate for local market, using capabilities of global product divisions  EMs measured with suitable metrics, and DC subsidiaries roll-out low-cost products from EMs  ‘Exploration’ mind-set for emerging markets Source: Adapted from Govindarajan & Ramamurti, Global Strategy Journal, 2011

4. New MNEs Building international presence: Why do it, and how? (Ramamurti & Singh 2009) How to move up the value curve? How to plug competency gaps? How to staff the growth, and create a global mind-set? Professionalizing management (vs family control) Integrating foreign acquisitions Profitability, through the “loss valley” How to remain independent and viable?

5. Who will win the learning race— EMNEs or DMNEs?