...Introduction Emerging markets are more important than ever in nowadays international businesses, they are increasingly making up a large share of many multinationals’ revenues and growths. Many multinationals believe their future success depends on how well they can master and win in these markets, they project share in their business based in emerging markets will increase 20-50% more in the next decade (Choudhary et. al., 2012). This study aims to reveal the motivations behind the multinationals and how multinationals succeed and fail in emerging markets with reference to relevant theories and examples. Theory of Multinational There are many theories analyzing why firms start to engage in foreign direct investments, the Eclectic Paradigm is a more integrated and general approach amongst the various, it explains how the multinational firms make their decisions and strategies by considering the Ownership Advantages (O), Location Advantages (L) and Internalizations factors (I). The theory incorporates ideas of market failure, location advantages and industrial organizations and is thus more holistic approach. The “O” paradigm explains why firms decide to start investing abroad because of possessing ownership-specific advantages relative to domestic firms, and the benefits can outweigh the transaction costs of operating in foreign markets and overcome the competitions of domestic firms, which lead to higher profitability with reduced costs. Examples of ownership-specific...
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