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Impact Of Multinational Corporation In Developing Countries
Impact Of Multinational Corporation In Developing Countries
Impact Of Multinational Corporation In Developing Countries
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Social-cultural learning can be illustrated through the examination of businesses operating out of both developed and emerging economies. A close examination of their similarities and differences provides distinctions with their beliefs toward business operations and ethics. This type of examination can lend insight into how companies within emerging economies are able to leverage their resources and capabilities in the development and growth of successful operations. The pervasive thought is emerging economies represents untapped potential (Chiou, 2013). However many companies such as Walmart have undertaken operations within these markets only to come up unsuccessful (Peng, 2014). So why would a US giant such as Walmart face problems within these emerging economies? Contrast this with (once) small startups Lenovo, Acer and Tata, these companies have found tremendous success conducting operations within such markets. This analysis will evaluate and compare the core resources and capabilities (R&C) of successful firms from both emerging multinational economies versus those within developed countries. This analysis will conclude with a role play of the potential ethical dilemmas leaders face, running a multinational firm within an emerging market. This role play will assume a new leader is faced with taking over a copycat firm who is in clear violation of intellectual property rights of a rival firm. The analysis will address the author’s perspective on how such a situation can be handled. Assessment Copycat firms within emerging markets (such as Lenovo, Acer and Tata) can be considered learning firms. Copycats essentially learned how to conduct business from an already successful business model. Their ability ... ... middle of paper ... .... The art of war. (1st ed.). Blacksburg, VA: Thrifty Books. Gupta, P. (2012, May 23). Dell's strategy questioned as shares dive. Reuters. Retrieved from http://www.reuters.com/article/2012/05/23/us-dell-research-idUSBRE84M0OR20120523 Herper, M. (2013, August 11). The cost of creating a new drug now $5 billion, pushing big pharma to change. Forbes, Retrieved from http://www.forbes.com/sites/matthewherper/2013/08/11/how-the-staggering-cost-of-inventing-new-drugs-is-shaping-the-future-of-medicine/ Lindsay, M. (n.d.). 8 ways to ensure your new-product launch succeeds. Fast Company, Retrieved from http://www.fastcompany.com/1829483/8-ways-ensure-your-new-product-launch-succeeds Peng, M. (2014). Global strategy. (3rd ed.). Mason, OH: Cengage Learning. Schilling, M. (2010). Strategic management of technological innovation. (4th ed.). New York, NY: McGraw-Hill/Irwin.
Globalization has broken down many of the trade barriers and has allowed companies to expand internationally over last few decades. Emerging markets such as Brazil,
Outsiders wondered how each company’s internal changes would affect their endless competitive battle in the industry. The case illustrates how global competitiveness depends on the organizational capability, the difficulty of overcoming deeply rooted administrative heritage, and the limitations of both classic multinational and global models.
“The rights of every man are diminished when the rights of one man are threatened” (Kennedy, 1963). Continuous improvements in technology capabilities have provided companies with tools to more easily conduct business on a global scale. However, when conducting business with different cultures, you risk different ethical standards. Companies should be accountable for ensuring their product or services can be received by the consumer in good conscience, void of human ethics violations, regardless of where the product or service originates; and consumers should not patronize companies that cannot ensure this trust.
Business ethics simply can be defined as the application of business values in the business practice of a company (Seawell 2010, p. 2). For a multinational company, business ethics is one of the critical aspects need to be taken into account in business decision-making processes. Failure to give attention on ethics may bring consequences on company’s reputation (Meyer & Jebe 2010, p. 159). The company is expected not only to pursue its own profits but also contributing to the environmental and social welfare of the community where it operates (Svensson & Wood 2008, p. 308).
Ethical cultures in large business organizations in Brazil, Russia, India, and China. Journal of Business Ethics, 105, 415-428.
Learning phase, firms started to build alliances with international respected companies, such as, possible competitors or acquisitions, absorbing the information about new technology and services, and know-how to improve their own brand. However, achieving this phase was no easy, China had its doors closed for foreign businesses for decades. They needed to train their key managers about how international companies work and manufacturing skills.
Gilpin discussed the MNC’s evolution through the lenses of a number of business economic theories. Using Raymond Vernon’s Product Cycle Theory, the overseas expansion of American companies until the 1960s was shown as a means of preempting foreign competition and preserving monopoly positions, which was possible then because of the wealth and technology gaps that existed between the US and the rest of the world (282-83). Following the closing of such gaps, Dunning and the Reading School’s Eclectic Theory explained the next stage of the MNC’s evolution as propelled by the great leaps made in technology and communication, which made internationalized management both possible and viable (283). Michael Porter’s Strategy Theory, meanwhile, asserted that the MNC is now in the era of strategic management, wherein activities and capabilities spanning borders allow it to “tap into the value chain” in the most advantageous positions (285-85). Gilpin made an interesting point, however, that MNCs are oftentimes the result of market imperfections and unique corporate situations. In many instances, the decision to expand a firm’s operations in another country was a means of circumventing protectionist measures and trade barriers, or simply to curry favor with governments, as practiced by IBM (280...
Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).
...ries such as Spain, Belgium, UK, Japan, and China. Future growth can be obtained through positioning current brands in those emerging markets.
Kaufmann, L., & Roesch, J. (2012). Constraints to Building and Deploying Marketing Capabilities by Emerging Market Firms in Advanced Markets. Journal Of International Marketing, 20(4), 1-24.
Our economic development will forever be defined as our ability to succeed internationally. PwC forecasts India’s real annual GDP growth until 2050 at 8.9 percent, Vietnam’s at 8.8 percent, and China’s at 5.9 percent. The list of fast-growing emerging markets goes on and on. The U.S. forecast is a meager 2.4 percent, comparable with most Western economies. The domestic companies that are likely to see incremental growth in the coming decades are those that are not only doing business internationally, but that are developing the strategic skill set to master doing business across cultures. Cross-cultural core competence is at the crux of today’s sustainable competitive advantage. For example, political environment will tell us, as to how and why political leaders control, whether and how of international business. Legal environment, both national and international will tell us about many kinds of laws by which business firms must work. The cultural environment will tell us about attitudes, beliefs and opinions important to business people. Economic environment will tell us about the economic system being followed by the host country, which may or may not be different from home country. It will also explain the variables such as level of development, human resources, Gross Domestic Per Capita and consumption patterns that determine a firm’s ability to do business. Geography will tell us about location, quantity, and quality of the world’s resources.
The company that we chose for the course Emerging markets is FamilyMart. FamilyMart is a convenience store which is open 24 hours per day, 7 days per week in means that they are also open on national holidays. FamilyMart offers many varieties in food, beverages, hygienic items, magazines, office supplies and basic medicines. The size of the stores of FamilyMart varies as they have big stores and small stores. The smaller stores are more for people who want to buy something small (like a bottle of water), and their bigger stores are for grocery shopping. Next to FamilyMart you have convenience stores with a similar concept named 7-Eleven and Lawson, which are their competitors. Their slogan is;
In conclusion, companies that seek to integrate into global markets usually encounter several problems because of the effect of globalization on business practices. The challenges originating from such integration is attributed to the differences in cultures in various societies across the globe. As evident in Google’s dilemma in China, there is no single set of universal ethics that are applicable to all settings and societies across the globe. Companies such as Google need to develop varying ethical standards that are relevant and appropriate to various nations and cultures in the world. This would enable the companies that are integrating into global markets to avoid ethical issues while maintaining effective business practices.
Robertson, C. J., & Crittenden, W. F. (2003).Mapping moral philosophies: Strategic implications for multinational firms. Strategic Management Journal, 24(4), 385-392. Retrieved from http://search.proquest.com/docview/225010000?accountid=32521
The differences in other cultures vary from beliefs to ways of life, or norms, of the different societies. The importance of understanding and sensitivity to other countries’ differences is crucial to a business’ success. “Lack of familiarity with the business practices, social customs, and etiquette of a country can weaken a co...