By: Arindam K. Bhattacharya and David C. Michael
This article talks about some of the way that smaller companies keep larger multinational companies at bay in developing countries. The first argument is that the larger companies and they are so used to being able to charge a premium for their product. This makes it difficult because the smaller more local companies can charge less for the same product and from there it is simple economics. Consumers will choose the lowest priced item. The second reason is the larger companies rely on different properties that developed countries have such as consistent telephone communication and internet access. Without these elements the bases of the larger companies begin to crumble and lose its efficiency, which allows the smaller companies to compete. Lastly, the larger companies have a tendency to be rigid and remain in the strategies that worked for developed countries when they need to realize that developing countries wants and need are very different. It is because of this that the larger companies lose touch with their consumer base and offer them what they think they should want. The smaller companies however are very close to the consumer and aren’t hindered by rules and preconceived notion; therefore, they can provide the consumer with exactly what they want.