Faced with the Crisis, Multinationals Consider a Two-Pronged Strategy – Expanding Their Global Footprint and Focusing Beyond their Core Businesses
Economic Expert Says the Key to Creating Growth for Multinationals Post-Crisis Is to Focus on Core Business and Expand Their Global Footprint
In a recent Reuters interview that wasfeatured in UK's The Guardian, the founder and president of the Krull Corporation, Dr. Alexander Mirtchev,discussed the impact of the global economic slowdown and the financialcrisis on the growth potential of major multinationals, in particular inthe emerging markets.
"Despite the fact that multinationals generate the majority of their totalrevenues from developed economies, emerging markets could provide theall-too-necessary upside that may be the difference between success andfailure during the crisis, its fallout and, most importantly, in thepositioning for recovery," he said.
"Granted that the pressure on all emerging markets is similar -- dealingwith the global slowdown in demand and the credit crunch, overexposure tomajor currencies and commodities price fluctuations, in a number of casesoverleveraging and budget deficits among other things -- they are by nomeans a 'single class of assets,' and are going to act and reactdifferently, and reach distinctly separate outcomes. From China to Chile,emerging market economies are equipped with specific advantages that wouldaffect multinationals' decision-making process -- large reserves, greateraccess to natural resources, or access to new avenues and options to dealwith the crisis as part of the EU," he indicated. "In addition, in theseinterventionist times, some are more agile, easier to 'manage' from thetop, and can adjust more quickly to the crisis, provided their governmentshave the necessary political will and wherewithal," stated Mirtchev.
According to Dr.Mirtchev, multinationals such as GE should not succumb to growingfinancial pressures, but should rather "stay the course, and approach localturbulences as part of any systemic business problem that will be aroundfor a while." The upside is that "even though these markets are notdecoupled from the world economy and will slow down further, significantsegments of these markets are placed to do better in comparison with therest of the world."
Secondly, "these markets can not only provide a certain offsettingcounterweight to the impact of the downturn on multinationals' bottom line,but, significantly, are the markets via which multinationals should growtheir global footprint looking beyond the recession," he indicated.
That is to say that multinationals should utilize the relativelypositive-looking segments of markets, such as China, India, Brazil, andeven Russia, despite its own economic travails, etc., to partially offsetthe effect of the slowdown elsewhere, and, most importantly, to providethemselves with a springboard for further regional and global growth. Aneventual recovery is inevitable and appropriate positioning today iscritical to tomorrow's success.
The Reuters article with Dr.Mirtchev was published in the United Kingdom's Guardian newspaper andcan be viewed in its entirety at: "Emerging markets lend some support to GE outlook."
Several interviews with Dr. Mirtchev on the global economy can be viewed atwww.youtube.com/focuswashington.
Dr. Mirtchev is also amember of the board of directors of the Kazakhstan sovereign wealth fund"Samruk-Kazyna."
Krull Corporation is a Washington,D.C.-based advisory and project management firm with expertise in dealingwith economic growth, industrial expansion and restructuring issues.Founded by Dr. Alexander Mirtchev in 1992, Krull Corporation capitalizes onextensive professional experience in market developments and reforms andfocuses primarily on emerging and rapidly developing economies. Over theyears, the firm has provided its clients with outstanding strategicguidance and professional services in various areas. Combining a uniqueblend of global reach and understanding of local markets, Krull is able to consistently producehigh quality results and returns.