A strategic analysis on MNC subsidiaries in India

Abstract

A population of over a billion in a liberalized economy in a stable democracy sounds like the ideal destination for a Multinational Corporation (MNC) to execute its growth strategies. Since liberalizing its economy in 1991, India has, for the above reasons and others, attracted MNC’s from several sectors and various geographies. Along with China and other developing nations, MNC’s have seemingly found a new landscape which would help them deliver superior profits to their shareholders. It was only after the economic reforms of 1991, FDI increased tremendously and a wave of MNC subsidiaries emerged. They attempted to leverage the low cost factors, skilled labor and the support from the government. Thus far there have been very few papers attempting to understand and document the success of MNC subsidiaries in India. The purpose of this study is to capture the progress of MNC subsidiaries in India, and analyze the reasons of success or failure. Firms operating in emerging economies such as India, can no longer adopt traditional strategies or for that matter, even strategies that are recommended for other emerging economies such as China, Russia etc., due to the different institutional context that is unique to India. New business models and strategies need to be formulated to leverage the bottom of the pyramid (Prahalad & Hammond, 2002). We aim to look at the strategies that are successful within the Indian context using the theoretical framework of Miles and Snow strategy archetypes (1978). There have been few studies, not with respect to India, that show that analyzer (Miles and Snow, 1978) organizations are successful. We contend and show that different strategies need to be adopted by firms operating in India.