Final answer:
MNCs in established markets should focus on fostering innovation and adaptability to withstand competitive pressures from emerging markets. Aggressive pricing strategies and reducing product diversity have their drawbacks and may not be sustainable long-term solutions. Emphasizing innovation can propel MNCs ahead by offering unique products and staying adaptable to market changes.
Step-by-step explanation:
Multinational corporations (MNCs) in established markets like America and the EU are facing increased competition from emerging markets. To react to this pressure, MNCs should consider a range of strategies, including improving market penetration, fostering innovation and adaptability, implementing aggressive pricing, and focusing on core markets. However, considering the global economic landscape, the most prudent strategies may often be to foster innovation in products and services and to increase adaptability to the changing market dynamics and consumer preferences.
While each option has its merits, emphasizing innovation helps MNCs to stay ahead of the competition by offering unique and cutting-edge products that can compete globally. Moreover, innovation and adaptability could lead to developing new market niches and enhancing the company's brand image. On the other hand, aggressive pricing strategies might lead to a price war, which could be harmful in the long term. Reducing product diversity could risk losing market share if diverse needs exist within the core markets.
Given the varied challenges and opportunities across countries with different income levels, high-income countries like the US and EU must leverage their technological edge and advanced workforce to maintain economic viability. At the same time, supporting the workforce with continuous education and adapting to technological changes ensures that these economies remain competitive in a global marketplace where middle-income countries are rapidly improving their capacities through increases in physical capital and innovation.