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In order to enter into foreign markets with technical strength, it has become increasingly critical for Japanese companies to maximize the effectiveness of research and development. In addition to global western firms, companies in Korea, China, and other emerging nations are gaining strength. To maintain a superior position in relation to these competitors, Japanese companies must develop products that are attractive to customers in a timely fashion. For this purpose, research and development (R&D) will require the best personnel in a company and companies must deal with strategically crucial information. Furthermore, as a place to amass cutting-edge information, it is most efficient to determine a base and concentrate the R&D efforts. Accordingly, global firms with many foreign sales and production offices opt to keep R&D activities within their home countries.

When considering the R&D centers of Japanese firms by country, China is second to the US, and the number of R&D centers there is increasing. The importance of China as a center for R&D is not limited to just Japanese firms; western firms are also investing there. According to a UNCTAD survey, China is the most important country for R&D among companies in the advanced nations (UNCTAD 2005). IBM, Microsoft, Motorola, Nokia, Sony, Toshiba, Hitachi, Fujitsu, NEC, Samsung, and other leading high-tech companies have created research centers in China, from where global R&D is conducted.

As the rate of market growth in advanced nations is tapering off, emerging nations are showing great growth potential, with markets expanding alongside increasing income levels of the people of these countries. As such, emerging nations are increasingly becoming attractive as locations for R&D centers to capture their growing markets. Emerging nations themselves are incentivized to attract corporate R&D from advanced nations. These centers make possible the development of highly skilled workers, and are expected to improve the technical abilities of related firms.

Suzuki Motor Corporation (Suzuki) is an automobile and motorcycle manufacturer of compact cars such as Alto and Wagon R. Domestically, the company trails Toyota in terms of the annual car production, and is about the same size as Nissan and Honda. However, it is India’s number one automaker, boasting of more than 30 % share in the passenger vehicle market. Suzuki’s business in India began with a joint venture (JV) in 1982 with the Indian government and an investment in the state-owned Maruti Udyog. The company began manufacturing the Maruti 800 (Alto) in 1983. The Maruti 800 became popularly known as the “people’s car of India,” thereby enabling Suzuki’s Indian subsidiary, Maruti Suzuki India (Maruti Suzuki), to enjoy overwhelming strength due to its brand, product line up, and dealer network.

This chapter uses case studies of management strategy for effective global level operations to discuss how companies from advanced nations can incorporate emerging countries experiencing rapid growth into their operating processes. There are two approaches to corporate strategy theory for maintaining sustainable competitive advantage against competitors over time: an approach focused on management resources held by the company (Barney 1986, 1991), and on a theory of positioning that analyzes the competitive environment of a market to select the optimal position (Porter 1980). Extrapolating these corporate strategies to a global level requires an awareness of national barriers. While the earth may be becoming flatter, there are still significant economic and institutional gaps between advanced and emerging countries.