Multinational corporations are often best positioned to face global challenges. With their ability to adapt and operate in diverse markets, these companies demonstrate exceptional resilience even in uncertain times. Jody Jonsson, Equity Portfolio Manager at Capital Group, shares four reasons why these firms can continue to thrive.
1. Multinational corporations adapt to geopolitical tensions
The USA-China relationship remains complex, but multinationals have shown they can navigate these challenges. Companies like TSMC and ASML exemplify “global champions” that continue to invest internationally to diversify their operations. TSMC is expanding in Arizona and Japan, while ASML strengthens its presence in Germany, Connecticut, and California. These companies demonstrate how multinationals can reorganize and position themselves for success even in tough environments.
2. Experienced management teams tackle challenges strategically
Novo Nordisk is a prime example of how experienced management teams can optimize operations. The company improved its supply chain management and invested in new facilities in Italy, Belgium, and Indiana. Moreover, it is expanding its production capacity in Denmark and France. These strategic moves show that proactive management is key to overcoming obstacles and ensuring long-term success.
3. Supply chain reconfiguration is an asset
The pandemic and global conflicts have driven many companies to rethink their supply chains. The trend toward “reshoring” and relocating production to India, Vietnam, and Mexico highlights the importance of resilience over sheer efficiency. Caterpillar, for instance, has diversified its activities to address the demand for IT infrastructure and energy transition. Its diesel and gas generators play a vital role in data centers, showcasing the importance of adaptive strategies.
4. Global champions thrive in emerging markets
Multinationals that adopt a multi-local approach are better positioned to compete in emerging markets. For example, Mercado Libre, often called the “Amazon of Latin America,” stands out for involving local sellers, providing consumers with quick access to quality products. This hyper-local strategy builds trust and captures rapidly growing markets.
Conclusion
According to Jody Jonsson, the success of multinational corporations depends on their ability to adapt, innovate, and respond quickly to global market demands. For active investors, this is an excellent time to identify companies capable of overcoming current challenges and thriving in the long term.
