Multinational Companies are corporations which have their home in one country but operate & lives under the law & customs of other countries as well. MNC are giant firms with their headquarters located in one country and with variety of business operations in several other countries. Offices/branches/subsidiaries of MNCs work like domestic company in each country where they operate with district policies & strategies suitable to the concerned country (market). They are duopolistic in nature. Sometimes their operations extend beyond the boundaries of nation in which they originally started hence; they also act as transnational corporations. ‘Profit is like blood of businesses. When domestic markets do not promise a high frame of profits, business firms search for foreign markets. If some domestic companies expanded their production more in proportion to the demand, then they are forced to sell their excess production in foreign markets. Hindustan Machine Tools Ltd. Took up exports very seriously because of recession in the home country in the late 1960s. Competition can become a driving force for firms to become MNC because once competition starts in domestic markets, the week companies which are unable to meet the competition start entering international markets. Many governments provide a number of incentives & other support to domestic companies like tariff fees, less export duties, etc to invest in foreign markets. Monopoly power can be achieved due to resources, technological advances, product differentiations, exclusive market information being proactive stimulus. Most of the countries today liberalised their economies & opened to the rest of the world. These changes in policies attracted the MNCs to extend operations to... ... middle of paper ... ... were, they are & they will continue to grow. Works Cited Blue Maumau. 2004. What Businesses Go Well with Franchising?. [ONLINE] Available at:http://www.bluemaumau.org/8188/what_businesses_go_well_franchising_part_1. [Accessed 28th March 2011]. Cohen R. 2009. International Market Entry. [ONLINE] Available at:http://www.njsbdc.com/international/itadv.php. [Accessed 29th March 2011] Evans, R, 2005. Report on a turnkey project for Apple’s iPod in Nigeria. Journal of Project Management, 1, pp. 2-8 Neeraj, S, 2008. BBM Semester Scanner. 4th ed. Bangalore: Ujjwala P. Needle,D. 2004. Globilation . In: Paoli,L. and Cooke,A. Business in Context. 5th ed. Hampshire: Rennie,T. pp.20-46. Reuters. T. 2009. Worldwide M&A rankings. [ONLINE] Available at:http://www.reuters.com/article/2009/06/26/deals-graphics-idUSLQ68670820090626. [Accessed 28th March 2011].
With the continuous development and progress of society, globalization gradually becomes the main trend toward the development within the company. Therefore, correct understanding of a multinational company becomes extremely important. This research will introduce a multinational company in accordance with the three thesis from the perspective of comprehensively and objectively. It is helpful to understand multinational companies
Moore, L 1997, The Flight to Franchising, US News & World Report. June 10, pp. 78-81.
Off-shoring is the establishment of business operations outside national boundaries. The process of moving business outside these boundaries is to garner an advantage either through tax breaks, lower wages, lower transportation cost and/or relaxed regulations ("Offshore definition," 2014). Many firms either branch out as a horizontal multinational or vertical multinational. Horizontal multinational’s produce the same good or services as abroad. This foreign direct investment (FDI) is done to strategically place production closer to the target market. Doing this provides advantages surrounding transportation cost while enhancing learning associated with local needs. A vertical multinational is one that fragments a portion of its good to take advantage of lower cost (i.e. cheap labor). Markusen and Maskus found horizontal multinational replaces trade whereas, a vertical multinational positively correlates with trade (Markusen & Maskus, 2001).
A Multinational Corporation (MNC) can be defined as “a single entity that controls and manages group of goal-disparate and geographically dispersed productive subsidiaries” (Triandis and Wasti, 2008, p. 2). Multinational corporations are entities that make Foreign Direct Investment (FDI) and produce added value in countries other than the country in which they are headquartered. One of the key objectives of the MNC is to obtain capital where is it cheapest and to invest FDI and undertake production in areas that yield the highest rates of return (De Beule and Van Den Bulcke, 2009). However, many theories have been advanced to account for the decision-making process that MNCs undertake in relation to FDI. The purpose of this paper is to explain the two main theories – internalization theory and OLI eclectic paradigm theory – and to critique these in relation to some of the other conceptual models that have been advocated.
Philip Lief Group and Lynie Arden. 220 Best Franchises to Buy: The Essential Sourcebook For Evaluating the Best Franchise Opportunities. New York, NY: Random House, 2000. Print.
Investing or venturing into the international market involves critical analysis of the internal and external environment in which the company operates. Usually, a company will decide to venture internationally due to a saturated market or fierce competition in the current country of operation. The demand for a company’s products may have diminished as a result of an economic crisis thus the company will target a foreign market to sustain its sales. In other words, the firms expand internationally to seek new customers for its products. For example, the current Euro zone crisis led to low demand in Europe and many companies extended their businesses to emerging markets where demand was high. A company may also venture in the international market to enhance the cost-effectiveness of its operations especially for manufacturing companies that will benefit from low costs of production in developing world. Global expansion is a long term project as it involves demanding logistics to be successful. Thorough research must be undertaken to ensure that the expansion will create value for share...
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).
Not having to answer to a corporate boss is the dream of many and the flexibility that owning a business franchise creates provides this option. Success is not reached by simply creating a business, however. The level of success is measured by the size and efficiency of the business. Business growth is the driving force of the economy. The additional jobs and revenues created when a business expands allow the economy to grow at exponential rates. One of the fastest and most popular ways to increase the size of a business is to turn it into a franchise, which can then be purchased by individuals. Franchising provides opportunities that are beneficial to both the parent company and the purchaser. The company that owns the business can expand without having to pay such a large initial cost to open a new store since the franchise purchaser pays a cost to open the business. As well, the company can regulate many of the business activities so that there is a sense of consistency throughout all of the locations. The purchaser is allowed to use the trademarks and goods of the franchise which already have a large market presence. As well, they are provided with training and work standards by the company to help their business run smoothly (Kalnins & Lafontaine, 2004, p.761). Looking at the business model of the world’s largest food retailer, McDonald’s, provides great insight into franchising and business growth in general as well a better understanding of a global business that utilizes the franchising technique.
Crossing national boundaries is essential for gaining competitiveness in the present era. So companies are expanding and for this purpose, joint ventures are increasingly becoming common these days. The concept is also called internationalization (Beamish and Lupton, 2009) which is the result of the shift to more customized demands, core competency focus and desire to achieve economies of scale. There are many underlying reasons and benefits for such joint ventures. In some countries, this is the only way to engross in foreign business, for example, Maxico has requirement that all foreign investments in the country must undergo joint venture with Maxican firms. Moreover governments now have more involvement and interest in private business
An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry.
Making the decision to open your own business is a major life event. Starting a new venture can be exciting as well as rewarding. The first step to becoming a business owner is choosing the type of business you would like to run. This business can be something that you have wanted to start up yourself or you can go with an established franchise. Are you willing to share the profits in exchange for the relative safety of a franchise or would you prefer the risk and rewards of pursuing your own vision? Franchising is a continuing relationship wherein a franchisor provides a licensed privilege to the franchisee to do business and offer assistance in organizing, training, merchandising, marketing and managing in return for a monetary consideration
...ll as private sectors have gone international with new ventures outside the country. These companies are generating revenue, though modest compared to their overall sales revenue, by deputing their expert personnel outside.
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).
Mira Wilkins defines a multinational enterprise (MNE) as a “firm that extends itself over borders to do business outside its headquarters country.” By 1870, a period denoted as industrial capitalism, MNCs started to evolve and the nature of foreign direct investment (FDI) changed.... ... middle of paper ... ...) , The Oxford Handbook of International Business, New York: Oxford University Press.
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.