Many of the Western multinationals operating in Asia have a head start when it comes to achieving the potential benefits of cross-border integration. They already have an international reach that spans the region through established subsidiaries and experience of how to adapt to local conditions. But arguably the presence many multinationals have established in Asia is more suited to prospering in yesterday’s competitive environment rather than being well attuned to winning in the next round-especially against the new breed of Asian multinationals that seems likely to evolve as Asian companies rise to the challenge of inter-nationalization.
When compared with the demands of Asia’s changing competitive environment, the limitations of Western multinationals’ existing bases in Asia typically lie in three areas: the “long, thin arm” problem, lack of cross-border integration within Asia, and the belief that it is sufficient to “think global and act local.” If Western multinationals are to avoid losing ground to locals in the next round of Asian competition, these limitations will need to be addressed.
Author: Peter J. Williamson
Source: Harvard Business School (HBS) Working Knowledge
Subjects: International – Asia, Strategy
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