2. According the article” The end of Corporate Imperialism” by Prahalad and Lieberthal, please define
and describe “corporate imperialism” .How does this concept help to better understand past MNC
international strategies. Please describe two implications from this international strategy approach
for MNCs? Please provide an example described in the article or discussed in class.
Corporate imperialism is defined as: Having a narrow and arrogant perspective, assuming that
current product offerings (but lower-quality) in one’s own country can be successful in another
country failing to realize developing countries have their own unique needs and characteristics. ;
imposing Western models of commerce on developing countries. For years, executives have
assumed they could export their current business models around the globe.
o This concept helps to better understand past MNC international strategies because
using this mindset, companies would assume that the big emerging markets were
new markets for their old products. They anticipated an easy to achieve increase in
incremental sales for their existing products or the chance to squeeze profits out
of their old technologies. This thinking has lead to companies only being able to
obtain small segments of relatively affluent buyers. As a result they miss the very
real opportunity to reach much larger markets that make up the lower parts of the
socioeconomic pyramid (BOP market)
- Many multinationals did not consciously look at emerging markets as sources of
technical and managerial talent for their global operations. Due to this imperialist mind-
set, MNCs have achieved only limited success in those markets.
The implications for MNCs are:
- They must realize that success in the emerging markets will require innovation and
resource shifts. Therefore, as MNCs achieve success in those markets, they will also
bring corporate imperialism to an end.
- As MNCs try to understand the nature of these markets, the more they will have to
rethink and reconfigure every element of their business models.
- Successfully reaching these broader markets will require developing a deep and unbiased
understanding of the characteristics and needs of these developing markets.
Example: Revlon is an example from the article, where they introduced their western beauty products
to China in 1976 and India in 1994, where only the top-tier valued and could afford Revlon’s brand, they
underestimated the different cultural characteristics of the markets.