Assess the dangers for European TNCS wishing to focus entirely on Essay

Assess the dangers for European TNCS wishing to focus entirely on emerging markets for future business success - Essay Example In one way of saying, corporations are right in having such a perception. For example, in case of gambling, those who get straight into the game without paying adequate attention to rules and regulations as well as without studying tactics of other key players are more likely to incur huge losses. This theory holds true for transnational corporations as well. Nonetheless, investors who adopt proper measures to identify macroeconomic factors inherent to the emerging markets attain the capability to reach out to millions of customers and widen target customer base. A number of European transnational companies, such as, Vodafone and HSBC, have increased their stronghold in emerging countries such as, India and China, by simultaneously gaining access to cheap labour as well as a larger customer base. On the other hand, companies, such as, Ericson had failed to establish its presence due to strategic dysfunctions. Majority of these dysfunctions are consequences of various internal and external factors associated with emerging countries, which can prove to be immensely dangerous for European organizations, considering an expansion into these countries in order to achieve business growth (Henisz and Zelner, 2010). The relevance of this study lies in the fact that it highlights the relative risks and challenges in face of European transnational companies while considering an expansion into emerging economies. The most commonly understood definition of an emerging country is a low income economy with rapid growth, which utilizes economic liberalization as the primary stimulator for achieving further growth. Macroeconomic stabilization, revelation of administration monopolies to domestic and foreign competition and trade liberalization has in a combined way led to evolution of a new community in these countries, known as the middle