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The Rise of Transnational Corporations from Emerging Markets

The Rise of Transnational Corporations from Emerging Markets

Threat or Opportunity?

Studies in International Investment series

Edited by Karl P. Sauvant

This insightful book shows that foreign direct investment (FDI) from emerging markets has grown from negligible amounts in the early 1980s to $210 billion in 2007, with the stock of investment now being well over $1 trillion. This reflects the rise of firms from these economies to become important players in the world FDI market. The contributors to this book comprehensively analyze the rise of emerging market TNCs, the salient features of the transnational activities of these firms, the relationship of outward FDI and the competitiveness of the firms involved, their impact on host and home countries and implications for the international law and policy system.

Chapter 4: The Transnationalization of Supply Chain Management: The Experience of Brazilian Industrial Companies

Paulo T.V. Resende and Alvaro Bruno Cyrino

Subjects: business and management, international business


Paulo T.V. Resende and Alvaro Bruno Cyrino INTRODUCTION Corporate decisions to push business deeper into foreign markets have important implications for the modus operandi and the performance of any company. Traditionally, the motivation to internationalize is largely based on economic reasons (for example, business growth, lower costs), with effects for other areas. The logic behind the ambition to become a global company, then, is to increase market share, while concurrently achieving cost reductions through scale economies. The expansion into uncharted territories involves a rethinking of most business functions, including activities related to supply chain management, such as purchasing, logistics, production, sales and distribution. But compared to the expansion in domestic markets, the risks and uncertainties of global markets are much higher, in spite of the potential growth of revenues and profit margins. Given various risks and uncertainties, emerging transnational corporations (TNCs) from developing countries (companies expanding their international presence beyond exports) first seek possibilities for gaining market share in their domestic markets before tapping foreign ones. Yet since the 1990s, several Brazilian companies have searched for new opportunities in international markets through outward foreign direct investment (OFDI), facing in the process new challenges to avoid potential failures. One of the most important issues in the context of reducing risks and uncertainties is supply chain management. First, because global markets are not homogenous, the product and business model needs adaptation to different conditions. Second, companies have to add capacity, often at breakneck speed and at a global level,...

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