Learning from Local Market Leaders

Like many computer manufacturers, Chinese PC maker Lenovo has struggled in the past year with the effects of the global recession, shrinking margins and the move toward lower-priced netbooks. The company's latest financial results confirm that while its loss narrowed considerably in the second quarter, it has yet to return to profitability. Perhaps the bigger story is in its quarterly results: Lenovo is thriving in its home market of China and other emerging markets such as Russia, Latin America and Turkey even while it is losing market share in developed economies such as the U.S. and Western Europe. A Lenovo executive notes that the company has improved its position in emerging markets by using the same tactics that have worked for it in China. These tactics include focusing on consumer and small-business customers, marketing "commodity" PCs that appeal to these customers and improving its distribution and supply chain systems.

Other emerging-market giants, such as Mexican telecommunications provider Telmex and Indian industrial conglomerate Mahindra & Mahindra, have also dominated markets in their own backyards but struggled to make inroads in mature markets. These results demonstrate that the challenges to multinational corporations of crossing between emerging and mature markets go both ways.

When entering new countries, multinational firms often replicate the strategies that worked in their home markets. But, industry trends indicate that these firms would fare better by paying greater attention to the strategies of companies based in countries similar to these new markets. Taking a hard look at other companies that succeeded- and failed- in unfamiliar markets would help multinational contenders come out ahead during their own international expansion.