Strategic choices of an MNE in an emerging market: the case of Perfetti Van Melle

ABSTRACT

In this paper, I examine the strategic choices of an Italian DMNE Perfetti Van Melle (PVM) in an emerging market using Dunning’s OLI paradigm and Ghemawat’s AAA framework. I seek to explicate the ‘how’ and ‘why’ of the strategic choices made by PVM in a resource-constrained environment marked by institutional voids. I find that PVM gained sustained competitive advantage by leveraging its unique ownership advantages and the locational advantages bestowed by India. In doing so, PVM adapted its business model and aggregated its globally recognized best practices to succeed in a complex and hyper-competitive market like India. Further, I also find evidence that PVM successfully recombined its market-seeking ambition with a huge prospective consumer base that sought global brands and quality products.

KEYWORDS:

• Market entry
• OLI paradigm
• emerging market
• DMNE
• institutional voids

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. One Million € = 8.81 Crores INR as per 8 June 2021 exchange rates. PVM India’s turnover is 1847.9 Crores INR (R. Singh, 2019).

2. For a more detailed explanation of prescriptive and emergent approaches to strategic choice making, refer to the paper ‘Strategic prescriptive theories in the business context of an emerging economy’ by Coffie and Blankson (2018).

3. Paan/Paan+ outlets refer to small retailers selling a limited range of products like Confectioneries/Snacks/Water/Cold drink glass bottles, a single-use sachet of personal care products, cigarette, and other tobacco products (Paan, Paan Masala).

4. Knowledge spillover from the FDI destination country back to the MNE base location can be termed as reverse knowledge spillover.