This report looks at the benefits and challenges SME in working with MNCs, and examines strategies for establishing SME-MNC connections and relationship, allowing them to open new horizon & improve their abilities to expand and prosper. For MNCs, working with SMEs can bring benefits such as lower costs, enhanced innovative capacity, and increased flexibility in responding to changing conditions. The JAR submission format would layout are in following sequence of: Introduction; Reason for choosing the article; Article Summary; Article Critique; Concluding Comments and last but not lease, References.
Reason for choosing the article:
It was a clear decision to select this article mainly due to:
* Working in MNC(Hewlett Packard Singapore) for many years aliasing with SME, subsidiaries(Agilent) and vendors very often for support on purchasing equipment, components and engaging services to my manufacturing department.
* Upon completing reading the article, I’m very much do feel strongly related to the issues faced by SME (eg: realism with clarity on view of SME constraint mentioned in the article faced by them which I did not take into much consideration before during the process when working with them.)
* Feeling connected with this article as when going into details during article selection process, eager and motivated to naturally want to do more researching on other reports and review and I felt very fruitful even after completing this article review.
Shameen, Prashantham & Julian, Birkinshaw, both the authors of this article conducted five years research on the many attributes, hurdles & issues on SME connecting relationship and fostering collaboration with MNC. As globalization of trade & investment accelerates and for SME to grow & combat in a highly competitive business environment, decision on available investment opportunity options like focusing on home markets segments, independently seeking global exploitation expansion or ideally collaboration with MNC is critically depending on circumstances of the opportunity presented to them.
Linking into the value chain to identify differential potential on the supply side of an MNC can provide SME with higher revenues creating financial stability, access to new markets; increase economical of scale; enhanced innovative capacity can improve their competitive advantage position concurrently by driving cost and differentiation advantages strategy, and corporate reputation at home & abroad. Key advantages for MNC in collaboration can gain the products, services and specialized knowledge offered by SME, hence potentially allowing reaping new untapped innovation ideas and solution to the corporation. Further, it can gain better access to direct contact with local supplier distribution for cost effectiveness when sourcing raw materials and labor resource. With MNC initiatives constantly relaying support from SME, evidently will reflect healthy strong relationship, positive image for both parties and conforming to corporate social responsibility standards.
The prevailing huge constraint faced by the SME on penetrating into MNC business markets mainly due to dealing with excessive bureaucracy, issue to establish a level of trust & equal respect with MNC partners and maintaining the relationship with unforeseen change of management reps. No doubt there are vast differences in culture, resources responsibility and corporate objective and target that pose a challenge in partnerships. Adoption of military concept of Strategic Asymmetry do facilitate SME as model for small team interaction well along with NMC by using indirect methodology, understanding differences as strength, adaptable mindset for change and self-monitoring for continuous improvement to enable innovation, thus allowing SME to “dance with gorillas”. It is a high risk and cost For SME establishing with MNC.