SHADWICKHOLDING PLCEST. 2009Executive Consultation ↗← Research & InsightsMIBA Thesis · Emerging MarketsCompetition between
Competition between
Local Companies
and Multinationals
A strategic examination of how local companies can build, defend and sustain competitive positions despite the scale, technology and global reach of multinational corporations.
Scale is powerful.
Local knowledge is strategic.
Competition between Local Companies and Multinationals is one of the defining strategic challenges of emerging markets. This study was prepared by Ahmed Ramadan as an MIBA Thesis at ESLSCA Business School in December 2014, under the supervision of Dr. Ahmed A. Shalaby.
The research examines how local companies can build and sustain competitive positions despite facing multinational corporations with substantial financial resources, sophisticated technologies, established brands, advanced products, and extensive managerial and marketing capabilities. Its central argument is that multinational scale does not automatically guarantee competitive dominance, particularly where local companies possess a deeper understanding of their domestic markets.
Competitive Efficiency
Competitiveness as a dynamic capability.
The study explores competition through the concepts of productive and dynamic efficiency, highlighting how competitive pressure can influence productivity, innovation, resource allocation, and long-term corporate performance.
Global expansion can provide access to new customers, suppliers, partners, technologies, and investment opportunities, but it also creates significant strategic challenges. As companies expand internationally, they must remain flexible enough to respond to different market structures, customer expectations, distribution channels, and institutional environments.
Competitiveness is a broader strategic capability—not simply a function of company size or financial strength.
Strategic Positioning
Four choices for local companies.
A local company may protect its domestic position, extend successful capabilities into selected foreign markets, restructure around valuable parts of the value chain, or build transferable capabilities for direct competition. The appropriate strategy depends on the intensity of globalisation pressure and the transferability of its competitive assets.
Defender
Protect the domestic position by concentrating on locally rooted strengths and market knowledge.
Extender
Transfer proven capabilities into selected foreign markets where the company can retain an advantage.
Dodger
Restructure around parts of the value chain where local capabilities remain distinctive and valuable.
Contender
Develop transferable capabilities that support direct competition with multinational corporations.
Competition, Innovation & Growth
Pressure can reshape an industry.
Competitive pressure can encourage companies to adopt new technologies, improve efficiency, innovate, and continuously reassess their market position. At the same time, market power can provide the financial resources and stability required to invest in research and development.
Local leadership in an attractive regional market.
The theoretical framework is applied to the pharmaceutical industry in the Kingdom of Saudi Arabia, using the success of the local pharmaceutical company SPIMACO ADDWAEAH in competing with multinational companies as the principal case study.
The research focuses particularly on the relationship between competitive pacification and market share, examining whether strategic relationships and carefully structured interaction with competitors can contribute to stronger market leadership. The case is especially relevant because the Saudi pharmaceutical market is presented in the study as the largest and one of the most attractive pharmaceutical markets in the Middle East.
Research Conclusion
From confrontation to strategic alliance.
The study concludes that strategic alliances with multinational companies can help local companies manage competitive pressure and strengthen market leadership. Its case-study methodology considers annual reports, strategic audit reports, business plans, strategic-alliance agreements, interviews with senior management, and focus groups involving marketing, sales, and business-development teams.
Its broader strategic message is that local companies in emerging markets do not have to choose between resisting multinational competitors and surrendering to them. With the appropriate positioning, capabilities, and alliances, they can transform international competition into an opportunity for stronger and more sustainable market leadership.
Ahmed
Ramadan
This MIBA thesis was completed at ESLSCA Business School in December 2014 under the supervision of Dr. Ahmed A. Shalaby. It examines competitive strategy, innovation and alliance-building through the lens of emerging markets and the Saudi pharmaceutical industry.
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