Multinational Corporations (MNCs) are businesses that extend outside of their own country, whether they are located throughout the world or only in a couple other countries, they are considered multinational. The value adding activities which are owned by these companies are used to produce tangible goods or intangible services or the combination of both. There are many reasons as to why firms become multinational and there are various strategies for a firm to become multinational. The immediate motives of the Firms can be to expand business, to seek new market, or for additional profits and revenues. It may also be to concentrate on the economics of scale that a larger international demand can bring. The motive behind market seeking activities is strong among firms who have some advantage related to technology or brand which gives them a competitive advantage over domestic rival. Another reason for firms to become multinationals is Continue reading
International Business
International Business Management deals with the maintenance and development of a multinational operation across national borders, whose manager has the knowledge and the skills to manage and handle cross-cultural processes, stakeholders and business environments in a right way.
Conditions for Sustainable Competitive Advantage
Competitive advantage occurs when a firm is using a strategy that is currently not being currently implemented by any of its present and potential competitors. Sustainable competitive advantage continues to exist after the efforts by competitors to copy that advantage continues to exist after the efforts by competitors to copy that competitive advantage have ceased. That means, the inability of competitors to copy the strategy makes for a sustainable competitive advantage. Achieving sustainable competitive advantage is critical for companies since it is the only way to be successful in business. With a sustainable competitive advantage, businesses may expect higher employee retention, higher product margins, more sales and a stronger focus on the company as compared to their competitors. It is difficult to sustain a significant competitive advantage over a time without periodically revisiting the firm’s identity and purpose. For instance, reducing costs is not a true strategy because it simply provides Continue reading
Global Market Entry and Exit Strategies
Each company has a specific strategy may be selected to suit a company’s needs. Many companies use a combination of global and national strategies. Some firms use a global strategy elsewhere some countries and some products are more receptive to global strategies than others. Global strategies are directed at those national product markets that are large and have low barriers to foreign products and companies. They are also likely to compromise the center of world demand, particularly in the newer, more technologically intensive product. Companies adapting global strategies are not likely to target seriously countries with high barriers and small national product markets. However given the long term trend in declining trade barriers coupled with the economic growth, more companies will adopt global strategies. Global Market Entry Strategies Strategy is planning through companies achieve their goals and move forward. A company makes a decision to enter an international market, this Continue reading
Transnational Corporations (TNCs) and Foreign Direct Investment (FDI) Decisions
Knowledge-intensive production, technological change, shrinking economic space greater openness have also changed the context for Transnational Corporations (TNCs). There are new opportunities and pressures to utilize them. The opening of markets creates new geographical space for TNCs to expand in and access tangible and intangible resources. It also permits wider choice in the methods firms can use (FDI, trade, licensing, subcontracting, franchising, partnering and so on) to operate in different locations. At the same time, advances in information, communication and transportation technologies, as well as in managerial and organizational methods, facilitate the trans-nationalization of many firms, including SMEs. The combination of better access to resources and a better ability to organize production trans-nationally increases the pressure on firms to utilize new opportunities, lest their competitors do so first and gain a competitive advantage. Competition is everywhere – there are fewer and fewer profit reservations and market niches that remain protected Continue reading
Methods of Internationalization
In the process of globalization, a firm operates their activities globally and the internationalization process is one of the primary sites of attention. The changes in the technology in the fields of telecommunications and computer lessen the costs of cross border operations and encourage firms to engage in transnational production activities. Internationalization is a sequential process where firms internalize their economic activities characterized in terms of aggressiveness and motivated by either internal or external triggers or a combination of both. It is one of the key strategic decisions for firms to maximize or at least sustain profits to survive in the world of uncertainty and complexity. The global economic expansion has been largely facilitated by the growth of TNCs. They dominate world trade and capital movement with turnover exceeding the GNP of some countries. These corporations continue to grow and influence the landscape of the world economy. Once a firm Continue reading