Traditional Western business models could be under threat by ‘ambitious internationalism’ emanating from the emerging BRIC economies, a new study has found.

The report conducted by Cambridge University’s Institute for Manufacturing (IfM) on behalf of Capgemini, investigates the role of emerging multinationals in global trade. The report highlights the threat to western business growth from a new breed of companies that are rapidly moving onto the global stage. These companies have ambitious internationalisation strategies, pursued increasingly through mergers and acquisitions, some of which have targeted well-known western companies

The report investigates the growth profiles of a cross-section of manufacturing organisations within the key emerging markets of Brazil, Russia, India and China (the BRIC nations) and reports some interesting trends:

• The process of globalisation within emerging economies is driving the growth of domestic companies into emerging multinationals (EMs), which are challenging the traditional model of western business.

• Expansion approaches for these companies include international investment in Green-field operations, Joint Ventures and Mergers and Acquisitions, with the latter an increasingly popular strategy.

• Companies from the BRIC nations can grow by entering markets with offerings in products and services which would be unattractive for western businesses because of low prices, but these may be a bridgehead to growth into more profitable segments.

The growth of these EMs was studied by the Cambridge’s researchers in the context of historical, political and economic factors with particular reference to outward foreign direct investment (FDI). The four countries studied have very diverse economic backgrounds and these factors have created similarly individual contexts for growth and development. Nonetheless, each is exhibiting strong growth and acceleration in outward FDI which reflects the internationalisation of its EMs.