MNC also called as Multinational Corporation, is an enterprise operating in several countries but managed from home country, for example, Nike, Coca-Cola and BMW. Such companies have offices and factories in different countries also have head office where they co-ordinate global management. Multinational firms arise because capital is much more mobile than labour, since cheap labour and raw material are located in other countries, multinational firms establish there.
The advantages of multinational companies including, create jobs, wealth and improved technology in countries that are in need of such development, benefit from economies of scale, and lower output by purchasing automated equipment (fixed cost) and buying in bulk
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In 1995, the top 200 multinational corporations had combined sales of $7.1 trillion, which is equivalent to 28.3 percent of the world 's gross domestic product. The top multinational corporations are headquartered in the United States, Western Europe, and Japan; they have the capacity to shape global trade, production, and financial transactions. “ Grant J. Eldridge (no date stated) Multinational Corporations. Retreated from: http://www.referenceforbusiness.com/management/Mar-No/Multinational-Corporations.html
The future for multinational corporations, will still success in underdeveloped world market. As the buying power still remains unchanged, it also will leads the productive capacity of multinationals increasing. However, there is a foreseeable future of multinational corporations worldwide to continue to
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All payments made should be within the law and should be fully disclosed to the public, because unethical business practices and payments can be used against the organisation at a later stage. Managers should also consider the social consequences of economic actions when making business decisions.
Japanese managers are quite different from American managers, Japanese managers are more concerning in attitudes, values, high productivity, organisational growth, organisational stability and trying to perceive higher levels of self actualisation from their roles and positions. While the behavioural relevance of job satisfaction and individuality is higher for American managers.
With the American management approach, is the development of best standards, once the standard is reached, it is merely repeated. While Japanese management favours continuous improvement, which everyone os committed to improving where possible. In American systems, rapid advancement is based on merit and qualifications, while Japanese system rewards long services and dedication. Company loyalty is highly valued and rewarded in Japanese system on the other hand, American system is a higher turnover in management and
Following the globalization, many companies in developed countries move factories to developing nations. As a multinational company, there is at least one facility in one country other than its home country. Those companies have offices and factories in different countries and usually have a centralized head office in their home country. Advocates of multinationals say they create jobs and wealth. And multinationals can improve technology in developing countries, which are in need of this. On the other hand, critics say multinational companies often barely pay employees enough to live on in developing countries, and it is unethical to pay cheap wages.
In socio-economical aspect, TNCs do bring about benefits in the development of their host countries’ economies. According to cumulative causation, when TNCs outsource to a third party firm, there will be more jobs generated. Higher employment rate increases personal income of locals, thus generates more purchasing power for consumer goods, leading to growth and development of service industries, boosting the local economy. TNCs offer financial support to their host economies since they have to pay taxes to the local government and authorities. With this increased revenue, the government is able to invest in the development of better physical infrastructure, such as roads and electricity, and social services, such as health care and services. This in turn attracts more foreign direct investment (FDI) boosting overall economic growth. Taking China as example, 760 million rural people have migrated to urban areas for job opportunities. It is estimated that TNCs have helped to lift 200 million Chinese out of poverty.
John Baylis et al. (2011) comments on how $2 trillion is exchanged in the foreign market exchange every single day, this exchange goes on between transnational corporations. A transnational corporation has its headquarters in one country and operates partially or wholly owned subsidiaries in one or more other countries an example of a transnational corporation would be Google, whose main headquarters are in Mountain View California but they have multiple offices around the world such as Dublin. Huge transnational corporations (TNCs hereafter) estimated to account for one quarter to one third of all world output, 70% of all of the world’s trade and over 80% of the world’s investment. These figures given are proof that these transnational corporations are the key figure in the world’s economy that controls the location and distribution of all economic and technological resources the world provides.
The United States business culture is based on a direct and informal approach. This means that “rolling your sleeves up” and getting down to business is respected and expected when working in the United States. (Executive Planet) On the other hand, the Japanese culture is a complex and multi-layered system, which developed over thousands of years. This is very much apparent when analyzing the business culture. The Japanese put a lot of focus on having a hierarchical, group-oriented society, and aim to avoid direct confrontation, maintaining the workplace harmony on a high level.(Export.gov) The long-term focus on culture and tradition caused the business culture to be very formal and complex, a complete opposite of the American culture.
Today, many companies enter the global market, and some companies have become extremely successful in the global marketplace and others still struggling. In Theodore Levitt’s article “The Globalization of Markets”, he states that a well managed corporation focuses on selling standardized products with high quality and low priced instead of focuses on selling on customized products with high cost. Levitt defines the differences between multinational corporation and global corporation, and adopts many specific examples to proves his view. He defines the multinational corporation who operates in many countries and adjust its product based on the taste of specific region. This will result in a high cost to produce the product because company have to input more resource into each individual product. However, global corporation sells similar product worldwide at relative low cost. According to Levitt, the cultural differences are becoming more and more “homogenized”; therefore, becoming a global corporation will lead to the successful of the company in the global market.
They also see their managers as task masters and expert problem solvers rather than as motivators and they value production roles more than leadership roles (Hofstede, 1993, p. 83). In Japan, they value employee loyalty. They expect their workers to join a company and remain there for the duration of their working life. They have a groupthink outlook and spend a lot of time working in groups. They value what is good for the company and the team rather than looking for individual recognition and tend to be more peer led than manager led, which means that US management cultures are not a good fit for countries like Japan (Hofstede, 1993, p. 83-84). In France, employees who are educated are more highly respected and their workers are divided into two categories. There are the properly educated workers (cadres) and the not properly education workers (non-cadres). There is no crossing between the two and the cadres are given privileges that the non-cadres are not regardless of their actual job title or task (Hofstede, 1993, p. 84-85). In Holland, they manage by consensus (Hofstede, 1993, p. 85). China has many smaller, family run businesses and because of this, many times the manager and the owner are the same. They tend to be more specialized and less global, and most of the decisions are made by the most dominant member of the family that owns the business. They are very thrifty when it comes to cost and spending and apply Confucian values on money. Their management system is very lacking of modern business management practices (Hofstede, 1993, p. 86). In short, all these comparisons can be summed up by saying that all companies everywhere have a concept of management, but what it means and how it’s practiced is different around the world (Hofstede, 1993, p. 88-89). So, if
Multinational enterprises date back to the era of merchant-adventurers, when the Dutch East India Company and the Massachusetts Bay Company traversed the world to extract resources and agricultural products from colonies (Gilpin 278-79). While contemporary multinational corporations (MNCs) do not command the armies and territories their colonial counterparts did, they are nevertheless highly influential actors in today’s increasingly globalized world.
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).
A multinational enterprise (MNE) is an organization that has a worldwide approach to markets and production or one with operations in more than a country. An MNE is often called multinational corporation (MNC) or transnational company (TNC). Well known MNCs include fast food companies such as McDonald's and Yum Brands, vehicle manufacturers such as General Motors, Ford Motor Company and Toyota, consumer electronics companies like Samsung, LG and Sony, and energy companies such as ExxonMobil, Shell and BP. Most of the largest corporations operate in multiple national markets.
This dedication of Japanese employees to their work contributes greatly to the strength of the economy of Japan. They feel like they are part of a big family (the company). Employees work together for the benefit of the company as a whole. They truly feel that their hard work and success contribute to the company's success and growth. Companies also have special programs and classes for the employees, who are the children, to make them feel at home. There are company athletic clubs and cultural classes, such as flower arrangement and the tea ceremony. Since everyone is a member of the "family" in Japan, decisions that the company must make are circulated among the lower echelons of the work force for their opinio...
Modern society is dominated by multinational corporations. In the past 30 years there has been unprecedented development of transnational corporations (TNC), which is “any corporation that is registered and operates in more than one country at a time” (Transnational). Now, there are more than 63,000 TNCs, while there were only 7,000 in 1970. That is more than 900% growth in TNCs in only a few decades. Even more startling, 70% of all trade, includes at least one of these TNCs (Basic).
The progression and evolution of international business has played an integral role in the overall development and progress of the world economy, culture, and politics. The multinational corporation was an essential part of this process and has roots as far back as the 15th and 16th centuries in Western Europe, specifically in the nations of England and Holland, during a period known as mercantilism. This was a time of unprecedented global exploration, colonization, and other imperialist ventures. Organizations such as the British East India Trading Company, promoted both global trade and the acquisition of natural resources, primarily for their home countries in areas including Africa, East Asia, and the Americas. Global trade was the primary factor in the growth of the world economy during this time. However the modern MNC, as it is known today, did not appear until the 19th century. These new entities provided a new level of inter-firm connectedness, a wider division of labor, and a higher level of product integration across countries in which MNCs are growing. Studies have shown that modern MNCs are characterized by a high degree of complexity, and have not followed a linear pattern in their development. In addition, it is crucial to understand the geographical context in which these MNCs were founded. This paper will analyze the development of the multinational corporation (MNC) from the 1870s to the modern day and examine it what ways, and to what degree it has changed over time.
With the globalization of a product, a company might benefit in many ways. First, by sifting its production or services overseas, the company can reduce its overall production costs due to availability of low-cost labor. Second, working collectively with other companies overseas allows companies to access technical knowledge or resources that are either unavailable or are too expensive at home.
Nowadays, business is set in a global environment. Companies not only regard their locations or primary market bases, but also consider the rest of the world. In this context, more and more companies start to run multinational business in various parts of the world. In this essay, companies which run multinational business are to be characterized as multinational companies'. By following the globalization campaign, multinational companies' supply chains can be enriched, high costs work force can be transformed and potential markets can be expanded. Consequentially, competitive advantages of companies can be strengthened in a global market. Otherwise, some problems are met in the changed environments in foreign countries at the same time. The changed environments can be divided into four main aspects, namely, cultural environment, legal environment, economic environment and political system problems. All the changed environments make problems to multinational companies. In particular, problems which are caused by changed culture environment are the most serious aspect of running a multinational business. This essay will discuss these problems and give some suggestions to solve them.
Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.