What U.S. CFOs Can Learn from Emerging-Market Multinationals

Emerging-market multinational companies are leapfrogging their American competitors. Can U.S. CFOs learn from their successes?

Mexican bread maker Bimbo. Chinese electronics brand Haier. Taiwanese computer manufacturer Acer. A decade ago, those companies were largely dismissed by their larger, U.S. competitors. Now, they have taken over the lead in global market share in their respective industries.

These companies all have something in common. They’re emerging-market multinationals — companies from countries like Brazil or China that have assets and employees located outside their home country. 

The companies are profiled in Emerging Markets Rule: Growth Strategies of the New Global Giants, a book written by Mauro Guillén, professor of management of University of Pennsylvania’s Wharton School, and Esteban Garcia-Canal, a professor at the University of Oviedo in Spain.

In their book, Guillén and Garcia-Canal argue that EMMs, which have spent years winning business from U.S.-based behemoths like Sara Lee, GE and Whirlpool, tend to share many of the same strengths. For instance, they’re quick to execute. They exploit corners of the market. And they acquire smart.

Can U.S. companies learn from EMM’s successes? Yes and no. Part of the reason emerging-market multinationals outperform larger, U.S.-based companies is that they have looser ownership structures, and thus, the freedom to take more risks. 

“Most emerging-market multinationals are not publicly listed firms with millions of shareholders,” Guillén told CFO. “Many of them tend to be family-owned or state-owned. They’re looking for the financial return, but not necessarily in the short run,” Guillén says. “They make very large bets, and a lot of financial models, like rate of return, wouldn’t justify those investments.”

These companies also focus on things like showing strong commitment to suppliers or building capacity in anticipation of demand, for instance. “It’s a problem for CFOs to the extent that they’re competing against companies that don’t have to show results on a quarterly basis,” Guillén says. “It’s very difficult for the typical publicly listed [U.S.] firm to actually react to that kind of thing.”

That said, here are three lessons U.S. CFOs can take from the experiences of emerging-market multinational companies.

Focus on execution. Execution is even more important than strategy, says Guillén. One example is Mexican company Bimbo, now the largest bread maker in the world. “They didn’t reinvent sliced bread,” he says. Instead, they focused on a distribution network and asked questions like, “‘How do you take the bread from the factory to the shelf’”? Guillén says. “They tried to think of how they could make their trucks, drivers and delivery [routes] more efficient, paying attention to the nitty-gritty details that a lot of corporate executives dismiss.” 

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