Growing Role of Asian Multinational Enterprises - Essay Example

Asian Multinationals Introduction Business in Asia has undergone significant changes and reforms, as a result of which multinationals from this region have expanded globally. The recent boom in business within the Asian pacific has contributed to an increase in profits, which the companies invest in global markets. The fast growth of these firms into international markets can be attributed to cheap labor, as well as low interest rates on loans from their respective governments. In countries such as Japan, South Korea, and Taiwan, innovation has been a major issue of concern for companies operating in these countries. This paper will highlight the factors that have contributed to the growth and rise of multinationals from Asia in the global economy. The paper will utilize multinationals from different countries and different countries of origin in explaining the strategies used by the companies to expand globally. Some of the companies to be discussed include Toyota Japan, FAW, Kyocera, Samsung, among others. Reasons for the rise and growing role of multinational enterprises from the Asia Pacific Over the years, multinational enterprises from the Asian Pacific have expanded to the global economy with the aim of marketing their products. The strategies used by these multinationals focusses on the international, multinational, as well as global strategies. The organizations have devised these strategies to enable them expand to international markets, which are beyond their local markets. One of the Asian multinationals that has emerged as a global leader is Toyota, a Japanese car manufacturing company. With regard to international expansion, the global vision of Toyota is to own 50% of the total market sales by 2015. The company strives to meet this target through an enhanced global supply system, especially in markets that are emerging (Iyer et al 2009, p. 5). Toyota’s rise and growth can be attributed to the innovative strategies employed by the organization, which focus on manufacturing vehicles that serve specific needs of clients. For example, the company has been involved in the production of compact vehicles that tend to serve markets that are emerging. The global policy of Toyota regarding its operations in international markets has also contributed significantly to the growth of the company internationally (Iyer et al 2009, p. 7). The philosophy of the organization is to ensure that it contributes to the welfare, as well as economic development of the countries in which it operates. Toyota is involved in projects aimed at reducing unemployment, and improving infrastructure such as transport in countries where it has a branch. This is achieved by ensuring that there is collaboration with local industries, as well as taking part in local operations that are development based (Peng 2009, p.277). Corporate Social Responsibility has played a huge role in the expansion and growth of Toyota in the global economy. Whenever the company starts operating in a foreign country, it becomes a corporate citizen and this enables the company to make positive contributions to the society. For instance, the organization has been taking part in activities such as environmental conversation, funding charitable institutions, as well as training of human resources. This has enabled the company to gain reputation in the international arena since customers realize that Toyota is not only interested in profits, but also strives to invest these profits in projects that benefit the community. Sustainable growth of the company has been achieved through dialogue with locals and involving them in the activities of the organization that are meant to benefit society (Peng 2009, p.278). Manufacturing of vehicles that can be used in diverse markets has also contributed to the significant growth and rise of Toyota in the global economy. For example, the company manufactures vehicles that are suited to all terrains. This has ensured that consumers from the less developed nations, where the terrain is mostly rough, can purchase vehicles that will provide them with the services they need in their localities. Emphasis on quality has also been another major contributor to the rise and growth of Toyota automobiles. With the production of high quality vehicles and spares, Toyota has been able to increase its sales globally. Moreover, the aftersales services of the company have strengthened over time, leading to increased profits that enable the company to expand to international markets (Doner et al 2006, p.62). Reduced cost of production is another strategy that has led to the expansion of Toyota. With a small budget, the company has managed to manufacture a large volume of vehicles and spare parts. The low production cost also implies that the products of the company are cheap and can be afforded by most consumers. Thus, the company manages to sell vehicles in countries with small economies. Toyota’s spare parts are also cheap and readily available in all markets, making the company favorite for most vehicle consumers. The organization also receives immense support from local governments where it has set its base. There are many governments that use vehicles manufactured by Toyota. This strategy has greatly contributed to the expansion and sustainability of the company globally (Shimokawa 2010). Global production is another strategy that has enabled Toyota to emerge as a global market leader in the sale of vehicles. In the past few years, the company has increased investment to improve the capacity of production in emerging markets. For example, in India, the production of Fortuna started in 2009 while the Etios and diesel Corolla were manufactured in 2010. In 2007, Brazil began producing Corolla FFV; this contributed to an increase in the sales of the company. Thus, the strategy of the company to introduce vehicle production plants in international markets has contributed to its steady growth. Toyota’s strategies have been instrumental in enabling the company compete with other giants from Europe such as Volkswagen and BMW. Unlike the European companies, Toyota’s expansion is unmatched since the company focusses on a wide variety of vehicles such as pick-up trucks (Hill & Jones 2012, p.273). Apart from Toyota, another vehicle production company that has expanded globally is FAW. Established in 1953, FAW is a state-owned Chinese corporation that manufactures automobiles such as trucks. Since its establishment, the company has spread to global markets where it sells its products and established numerous branches all over the world. With branches in more than seventy countries worldwide, FAW has managed to expand globally and become a recognized supplier of automobiles. The global success of FAW can be attributed to the company’s production of quality automobiles. Just like Toyota, FAW is a leading manufacturer of quality trucks, custom bus chassis, as well as luxurious tourist coaches. The company also produces mini-vehicles that are of high quality (Hofer & Ebel 2007, p.230). FAW’s expansion to the global economy has also resulted from its diversification in the production of automobiles. From heavy duty trucks to mini-vehicles, FAW has managed to cater for the diverse needs of the automobile market. As a result, the company’s products have gained international reputation, enabling FAW to penetrate markets in almost every part of the world (Domansky 2006, p.13). The presence of the company in the global economy also emanates from high volumes of production. With a huge capital base, the company is able to produce large amounts of trucks, and other forms of vehicles. This has minimized shortages that can result from high demand for the company’s products. Thus, customers are assured that they will get the product they want to purchase whenever they go to a distributor of FAW in their respective countries (Thun 2006). Focus on customer satisfaction has largely influenced the expansion of FAW in the global economy. The first priority of FAW is to ensure that customers are totally satisfied with the products they purchase from the company. In order to ensure that customers are satisfied with the products, the company focusses on modern production methods, with the use of advanced technology, and management practices that ensure the design of the trucks are modern and satisfy the needs of customers. FAW produces medium, light, and heavy trucks that can be used for varying works by the customers. To connect customers worldwide, the company makes use of modern information and communication technologies. This has enabled FAW to gain a competitive edge in the automobile market (Inc 2013). The expansion of FAW in the global economy has been enhanced by a strong asset base of the company and availability of funds for expansion. Being a state-owned corporation, FAW has access to numerous sources of funding (Fernandez-Stembridge and Fernandez 2007). As such, the company can finance research and development activities with a lot of ease. Financial strength also implies that innovation in the company takes place without any financial strain. Forming a joint venture with Volkswagen has been a major contributor to the expansion of FAW in the global economy. The formation of FAW-Volkswagen Automobile Co. Ltd. was a major breakthrough for the company. It enabled the company to spread to European markets such as Germany (Pearce 2012, p. 17). Another industry in the Asian Pacific that has witnessed tremendous growth is the electronics industry. Samsung, which originates from South Korea, is a leading producer of electronic products such as televisions, mobile phones, cameras, and computers among others. Since its establishment in 1938, Samsung has grown tremendously and risen to become one of the world leaders in the manufacture and sale of electronics (Parker 2005). The global expansion of the company is alarming and it is evident that it has managed to rival established companies. One of the reasons for the spread of Samsung in the global economy is the manufacture of products that are superior. The superiority of the company’s products is unmatched and has enabled the organization to spread its activities to numerous markets globally (Lee 2006). Innovation is another factor that has contributed to the global spread of Samsung. The company realizes that change is inevitable, and as a result, it has always strived to manufacture unique products to serve the demands of the electronics market (Roll 2005, p.153). Integrity as an ethical value has also contributed to the success of Samsung in the global economy. In all its operations, the organization upholds ethical business standards, transparency, as well as fairness in its operations. This has given the company reputation in the global market and enabled it to make a lot sales. Samsung is the leading producer of LCD panels and has been the leading manufacturer of television since 2006. This has ensured that the company’s products can be found in virtually every market worldwide (Michell 2010, p.19). Moreover, global expansion at Samsung is enhanced by the company’s large production of memory chips. The popularity of the company’s products made it the leading distributor of smartphones in 2011. In all parts of the world where it operates, Samsung is known to take part in Corporate Social Responsibility. The company engages in activities aimed at preserving the natural environment, and this has significantly contributed to its growth in the global economy (Peng 2013, p.295). Samsung has wide channel for distributing its services given its presence in many countries. This ensures that customers have access to the corporation’s products within their localities. Besides, customer services are provided in the areas where the customers purchase the products (De & Business Expert Press 2010, p.55). The company has many business divisions, with each dealing with the manufacture and distribution of a specific product. This specialization and division of labor has contributed to improved services and improved the image of the company globally. Kyocera is another electronics company from the Asia Pacific that operates globally. It is a Japanese corporation that deals with the manufacture of electronic products, as well as the distribution of the products to global markets (Peng 2013, p.298). Kyocera has underwent massive growth in the past few years owing to its global expansion strategies. The management strategy of the company that has largely contributed to global expansion is diversification. This strategy is meant to help the company achieve sustainable growth and respond to changes in the business environment. A core strategy that has strengthened the existence of Kyocera in the global economy is improvement of existing businesses. The company strives to create strong ties with its subsidiaries in order to improve profitability (Plunkett 2008). Through the promotion of global strategy, the company has managed to gain a competitive edge in the market and become relevant in the global market. Moreover, there is a regular review of companies of branches that perform poorly to establish the best strategies that can lead to growth in these businesses. Exploitation of competitive advantage is a factor that has contributed to the rise and growth of Kyocera globally. The company has a philosophy that focusses on customers as key contributors to the development of the organization. Technologically, Kyocera embraces competitiveness in the manufacture of products (Inamori 2012). The expansion of Kyocera in global markets has also been contributed by the creation of new businesses by the company. The firm ensures that they establish themselves in markets that have not been penetrated by other electronics firms. To create new markets, the company employs resources that help in the development of new technologies. Presence of Kyocera in new markets has been a major driver of its global expansion policy (Paprzycki 2013). Compared to American and European Corporations, the multinationals from Asia Pacific have shown tremendous improvement and growth. For instance, Toyota and FAW have become a force to reckon with in the automobile industry compared to other automobiles such as GMC and Land Rover. The global sales of Toyota surpass those of the corporations from Europe and America. On the same note, Samsung and Kyocera have established themselves as leading distributors of electronics. Samsung in particular has become well established in the tablet market. The Samsung Galaxy Tablet is considered more competitive than Apple’s iPad. Samsung mobile phones and televisions have a large global market share than products from Europe. Conclusion In conclusion, Asian Corporations have experienced growth in the recent past to the extent of expanding to the global market. Such corporations include Toyota, which a Japanese car manufacturing company and FAW, a car manufacturing corporation based in China. 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