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Transcript of Multinationals
Effect on Business Environment
Multinationals (MNC) or trans national co-operation (TNC), or multinational enterprise (MNE)
Key drivers of change?
How do we measure these attributes?
Are they beneficial or are they a threat?
a corporation that has its management headquarters in one country and operates in several other countries
East India Company (17th-19th century)
Formed for pursuing trade with the East Indies, ended up trading with the Indian subcontinent and China
Ruled large swathes of India,
First modern multinational corporation?
Held a privileged position in the British government
Why be multinational?
Why decide to do business in a different country?
Do not know the laws, local customs or business practices
More efficient to combine assets of value overseas with local factors of production at lower costs?
that interferes with trade
Why did MNCs develop?
Response to downturns in national economies
Exploit economies of scale, reduce costs
Developments in transportation, information and communications technology
Growth by acquisition or joint venture
Protection against competition?
Access to raw materials and new markets
only a few businesses can compete
"flakes that are frosted" vs. Kellogg's Frosties
Force smaller busineses out
growth forces the company to raise their prices
Look elsewhere for same product?
capabilities to take on large contracts.
Multinational corporations are seen as large, utilitarian enterprises with little or no regard for the social and economic well-being of the countries in which they operate
True or False?
Technology means local time zone less important
Local laws always apply
Globalisation = Less likely to be “loyal” to home country
response to globalisation
Strategy aligned to
cost + responsibility
Marketing is local
early stage in development?
Operations in one or more overseas country
for local markets
decentralisation = control problems
Focus on cost reduction
Switching operations to low-cost countries
Economies of scale
Does it exist?
joint ventures and alliances
Mentality rather than strategy
Flexibility, responsiveness and innovation
Wholly owned subsidiary
multi-domestic + global
economies of scale plus local responsiveness
Corporate rather than cultural
Asset augmenting ?
Asset exploiting ?
collaboration rather than control as part of a global strategy
Does the classic model still predominate in transitional markets?
Perfect market information
No participant with market power to set prices
No barriers to entry or exit
Equal access to production technology