Analyzing the Success Factors

Abstracts

The global internationalization has changed the concept of the business and has made the business focus on various essential sectors, which includes research and development, technology, innovation, etc. This study aims to analyses why some R&D intensive multinational companies succeed in their performance while its competitors fail to attain superior performance. This study has made the usage of the case study to analyses this study and has applied a qualitative research study. The Coca-Cola company was taken into consideration where it was seen that the company is attained success due to its higher emphasis on R&D activities. Thus, it could be stated that research and development are highly essential to attain success.

Internationalization had a profound effect on the multinational enterprise’s development. In the past 5 decades, the world had changed drastically, wherein 5 decades ago, the business was localized and was served in a more stable market. However, in the present context, the advancement in communication, as well as transportation, have not only helped the multinational company to accelerate but also encouraged competition as well as economic growth. A multinational corporation is known to be the main channel of new technology in between the countries. It is assumed to have advance technology like production technology, marketing as well as management techniques which expects to attain knowledge from such technology to strengthen oneself and face the challenges associated with foreign competition. There are various statistics which have increased the R&D internationalization through MNCs. At the same time, the recent outsourcing trends of intellectual labor have increased the fear, and thus, the country is losing its comparative advantage in the knowledge-intensive products. This phenomenon has increased by shift through traditional competence exploiting the activities of foreign research and development to the creation of competence.

Many research states that MNCs focus on investment in the R&D in the foreign industry through innovative technology, which results in the transfer of foreign technology into the home country. MNCs don’t do their business in foreign countries, but it is seen that they regularly attempt to enhance the profits and undertake foreign R&D investments where profitability is expected to enhance. The MNCs are seen using research and development as it enhances productivity and provides platforms for innovation and creativity.

Research and development assist the business to attain a viable edge over its competitors and develop plans of the other functions. MNCs are seen applying R&D functions to develop plans and have a clear picture of future issues that require solutions. It is seen that various firms expand their capacities across borders, which results in the growing internationalization of the research and development activities. The firms equip their subsidiaries with R&D departments and set excellence in industry-specific locations. When the firms seek foreign knowledge away from the home country, then it seeks to enhance the chance to achieve advantages through spillover of knowledge. The absorbing of the additional information helps the firms to attain the personal base of which improvise their innovative power and generates a competitive advantage and attain a higher profit. Besides the gaining of newer knowledge as well as searching for effective production technology, firms look to attain effective admission to the new market as well as customers while repositioning the R&D activities to the foreign countries. It can thus be stated that the R&D internationalization highlights the global strategies of MNEs and their intention to review newer competitiveness.

Methods

This study aims to explore why some of the intensive multinational companies succeed in achieving superior performance while their competitors fail. To understand this study, this article takes the usage of qualitative methods wherein a case study of Coca-Cola is taken into consideration. This study collects secondary data through academic journals, newspapers as well as books. Since there was a collection of subjective data, so this study makes the usage of interpretivism philosophy and applies inductive approaches. Since the data is collected from the case study, so there is a use of qualitative content analysis which reviews and analyses the developed case study.

Results

The Coca-Cola Company is the world’s largest company of beverage, which possesses more than 500 still brands associated with it. The company manufactures as well as distributes larger varieties of non-alcoholic beverages such as soft drinks, water. Enhanced water, juice, energy drinks, coffee and other various products. There is various competitor of the Coca-Cola which includes PepsiCo, Red Bull, Parle, etc. However, the performance of Coca-Cola is higher as compared to other company due to its higher emphasis on research and development sectors. The company is seen spending millions of dollars in this sector to bring up new products in-front of the public to attract them and increase their sales. As per one research, it was found that Coca-Cola have spent $118.6m on the health research and planning to downsize the role of sugary drinks as it leads to obesity. The company is also seen introducing its research and development center in different country to fuel the innovation pipeline and attract a larger number of people. It had been analyzed that the Coca-Cola company is highly getting financial benefits as compared to other beverage companies as this company is giving its major focus on research and development sectors. The care and concern regarding the customer’s health have helped the company to attain the trust of the customers and increase sales.

Discussion

It had been analyzed that R&D is a long-term force for the growth and competitiveness of the MNCs. It assists the business to possess a competitive advantage over its competitors. Research states that those company which doesn’t use R&D functions could not develop plans cannot solve future problems. There are various MNCs which doesn’t apply R&D operating in their organization and face the issues of failure. Research and development act as a catalyst that enhances organizational growth by bringing breakthrough products and services in the market. It is evaluated that this element of the company is highly demanding in the present competitive business environment where customers are looking and relying on the new technology and products. Some firms influence their R&D efforts by making new products, which makes them forward to their competitors. It is further analyzed that there is a company that takes the expenses of the research and development as an expenditure and doesn’t tend to apply them in their organizational process. However, it is an investment which brings higher return and profitability it the company. Although the Return on investment (ROI) for the R&D efforts might take a longer period but once success is attained, the financial returns could be higher than expected.

Conclusion

It can be stated after reviewing the above descriptions that R&D activities are highly preferred by the multinational corporations or enterprises which serve them with high-tech technology and designs. The R&D department, which prevails in multiple countries, also helps the firms to attain benefits through global knowledge resources and enable the foreign business to own the process of innovation using cooperation or through spillover of incoming knowledge. Thus, it can be a review after comparing the firms with and without R&D that forms with foreign R&D generates a greater number of patents and are highly successful in generating innovative products. They are also seen attaining higher sales growth rates because of newer products. Thus, it can be concluded that since R&D-intensive multinational companies make the application of the research and development activities which are the catalysts to enhance financial performance, the other company fails to perform better due to lack of research and development activities.

References

Ambos, B. & Ambos, T.C., 2009. Location Choice, Management and Performance of International R&D Investments in Peripheral Economies. International Journal of Technology Management, Vol. No. 48, No. 1, pp. 24-41.

Andersson, U. & Pedersen, T., 2010. Organizational Design Mechanisms for the R&D Function in a World of Offshoring. Scandinavian Journal of Management, Vol. No. 26, pp. 431-438.

Coca-Cola company, 2015. OUR INVESTMENTS IN HEALTH AND WELLBEING RESEARCH AND PARTNERSHIPS. [Online] Available at:

Coca-Cola Company, 2016. Coca-Cola's Mexico R&D Center Focuses on Recipe Innovations. [Online] Available at:

Czarnitzki, D. & Kraft, K., 2010. On the Profitability of Innovative Assets. Applied Economics, Vol. No. 42, No. 15, pp. 1941-1953.

Dunning, J., & Lundan, S.M., 2009. “The Internationalization of Corporate R&D: A Review of the Evidence and Some Policy Implications for Home Countries”. Review of Policy Research, Vol. No. 26, No. 1-2, pp. 13-33.

Kim, H., Kim, H., & Hoskisson, R.E., 2010. Does market-oriented institutional change in an emerging economy make business-group-affiliated multinationals perform better? An institution-based view. Journal of International Business Studies, Vol. No. 41, pp. 1141-1160.

Looking for further insights on An Interpretative Phenomenology Approach to a Study? Click here.