Multinational Perspective Essay

multinational corporations originated from the take ininess for substantial capital and limited risks for large industrial or mercenary consortiums for overseas trade. The modern concept of transnational corporations came into be during the 17th and eighteenth centuries and a good example of much(prenominal) a venture is the British East India attach to in South Asia and the Dutch East India Company in South East Asias Indo-Chinese Peninsula.With the period communications and wariness technologies available, more than companies are able to make the most out of international trade liberalization. Today, international corporations are expanding themselves to increase their marketplaces, increase brand heading and image and benefit from inexpensive raw materials and labor (Chang, 2003).Scenario for international CorporationsCurrently, at that place is an estimated 40,000 transnational corporations world wide in and somewhat 250,000 overseas collaborations running cr oss-continental trading operations. Most transnational corporations are from the unite States, westerly europium, and Japan. By 1995, the top 200 multinational corporations alone had collective revenues reach of $7.1 Trillion which is equivalent to 28.3 percent of the gross domestic product globally (Bernal, Kaukab, and Yu, 2005).The operations of multinational corporations are governed by the policies of The World pot memorial tablet (WTO), the world(prenominal) Monetary bloodline (IMF), and the World Bank. though the traditional calculate of multinational corporations is that of big manuf do workurers, current trends and increments in technology involve besides given rise to micro-multinationals1 as well clientele process outsourcing (BPO) ventures (Ewing, 2005). Among the countries being targeted for multination expansion, chinaware and India are the current top favorites of multinational companies (McKinsey Global embed MGI, 2004).Globalization has allowed access to markets via technology and has minify distri exception, lower internal coordination costs. It has besides allowed for networking of specialized services and products in weather of corporate functions through BPOs whether within the companies internal operations or its external activities (Ewing, 2005).Entry to ontogenesis foodstuffs Though the scenario of multinational expansion has changed, the rules of entranceway remain traditional in most evolution countries (Hoos, 2000 Tubbs and Schulz, 2006). Strategies to move into new markets for multinational corporations are by mergers or direct acquisition, sequential market entry and through colligation venturesMergers Merger or direct acquisition of subsisting companies is the forthright entry to a market. This is the strategy usually employed by large multinational corporations. It maximizes the economies of scale advantage to overcome barriers to entry (Ewing, 2005 international Corporations, 2006).Considered as strange direct investitures (FDI), they are playing field to non only commercial formula but are also direct busheled by monetary and investment policies by the innkeeper country, and related international trade policies (United Nations host on Trade and Development UNCTAD, 2005). Beginning in 2004, it has been identified as a critical in developing countries and studies abide been commissioned to valuate their impact of the economies of developing countries (UNCTAD, 2004).The first ranked for FDI is India and was followed closely by China (Kearney, 2004). Though India has been able to outrank China and Mexico, China actually acquires more FDI significantly either country since 2002 (Department of Industrial Policy and Promotion, 2005 MGI, 2004).Sequential Market EntrySequential market entry involves foreign direct investment and getting hold of a sector if the market related to the names companies core line of business, usually its key product or competency. It is different fr om a merger that it that the parent attach to does non consume in all of products, services or operations into a host country (Multinational Corporations, 2006). This method is the preferred by smaller companies and conservative business to begin their multinational operations (Kearney, 2004).Sony, in its initial expansion to the United States first limited its operations to manufacturing idiot boxs but eventually expanded its operations to the production of magnetic tape and eventually to the production of audio in the 1970s. Today, Sonys operations in the United States include semiconductors and personal communications. Sonys United States operation utilize its expertise and leadership in manufacturing television to establish itself in the industry and its local anaesthetic competition and then used this it as leverage to expand its products in the United States (Multinational Corporations, 2006).An otherwise ontogenesis in multinational operations is that outsourcing of ope rations or services to other countries. fit to both UNCTAD 2004 and 2005 reports, BPO is one of fastest working industries globally. give voice Ventures Joint ventures are operational or service partnerships with companies already existing or operating in the host country. This method of entry is limits is not as liberal as mergers or sequential market entry but is effective when entering heavily regulated markets. The method has been in point use in entering the markets of China, the Soviet Union and that of easterly Europe (Multinational Corporations, 2006).The issue of limited control for parent companies is the usually critique of this method and has raised issues regarding liberalization issues (Bernal, Kaukab, and Yu, 2005). troops countries and venture partners significantly benefit from the take of technology and charge while parent companies are able to enter otherwise restrictive market. The concern for multinational companies however is the development of conflicts w ith joint venture partners who can become competitors (Multinational Corporations, 2006).Another concern for most multinational corporations regarding entering into joint ventures is that local policies, which their joint venture partners are subject to, are easily changeable. The creation of stable industry policies that may restore joint ventures and similar partnerships is one of the major wayes of developing countries trying to guide more investments (Department of Industrial Policy and Promotion, 2005). This move has been supported by the current agenda of the World Trade Organization (WTO), the internationalistic Monetary Fund (IMF), the World Bank and the United Nations (UNCTAD, 2004).Multinational Corporations in growth Countries entree into s developing market requires the recognition and creation of strategies to deal with myopic economic conditions, low educational levels, technological barriers or lack of existing channels and infrastructures for the distribution of the product and service (UNCTAD, 2005).Globalization and Trade loosening A major reason for multinational expansion is accessing a wider market. This coincides with the international agenda of globalization and trade liberalization. The Asian Financial Crisis may lock be a haunting scenario for many investors (Bernal, Kaukab, and Yu, 2005), but the current trends in Asia, particularly China and India, is creating renewed interest in expanding to developing countries (MGI, 2004). The efforts of developing countries to liberalize trade and industries have also been encouraging. Recent trends have allowed the evanesce of Coca-Cola to India (Nayak, 2006), the ranking of Asia as the most attractive FDI region (Kearney, 2006) and the growing winner on BPOs in India and the Philippines (UNCTAD, 2005). The operations of multinational corporations have been rehabilitative in the development of markets, the introduction of new products and the development of industries as a whole. Inv estments of these companies have helped stressed local economies space and opportunity to expand. The technology and management knowledge that multinational companies bring in has helped local explore and development to improve standard practices and policies. Multinational companies have been able to benefit from reduced labor, materials or overall operation costs. A significant benefit of spill global is establishing brand and product presence. Many companies have also benefited from the variated market that globalization has proposed them increasing product efficiency and marketability.Global Trend and Scenario Though multinational corporations significantly contribute to international trade and development have not enjoyed acclaim. Their presence and nature if operations is said to be more detrimental to local economies than beneficial (Baitu, 2006 Tubbs and Schulz, 2006, Chang, 2003). Studies have also shown the negative effect of the operation of multinational corporations prompted some governments to take a protectionist approach which ahs deterred not only these corporations but trade liberalization in general (Wysocki, 2006). According to the UNCTAD report regarding multinational corporations in least developed countries (UNCTAD, 2002), the highly centralise nature of these corporations is the main apprehension against them. Though multinational corporations contribute significantly to local economies in the form of investment, technology and commerce, there is very puny barrier to exit from the local industry in case of a national economic downturn (Hoos, 2000). They have been said to have contributed to the excitation of labor conditions, environmental degradation, and degeneration of social conditions, declined local industries and livelihood, and raised flash levels (Tubbs and Schulz, 2006). Furthermore, the mobility of multinational corporations leaves host countries with less bargaining power and allows them significant leverage over cou ntries that are highly disadvantaged and needy of the jobs and investment they provide (UNCTAD, 2002).Current Issues and Concerns for Multinational Operations In an international environment, a companys concerns will have to admit more external factors. International trade laws, liberalization and globalization are the obvious concerns that emerging multinational have to face. More importantly, companies have to orient themselves to local markets, governments and policies that may they may not be familiar with (Wysocki, 2006). Exploring international markets also increases competition not adept with traditional competitors but also for new business developments such as micro-multinationals (Ewing, 2005). The risks and challenges of becoming a multinational company need strategies that consider the companys goals, international market scenarios and effective local merchandise approaches.RecommendationsIn general, there should be further quantitative and qualitative studies on mul tinational corporations actual impact to host countries from individual to industry levels especially for the least developed countries that host them (UNCTAD, 2002). Multinational companies nowadays are not just commercial ventures they also serve as highways of liberalization. Some multinational companies have greater assets than the poorest of developing countries leaving these nations with limited bargaining power. The need to attract investments by multinational companies mustiness not undermine the strain on welfare, health and social life (Baitu, 2006).The following considerations are close in UNDTADs World Investment sketch for 2004 and 2005, the 2002 Report Multinational Corporations in Least Developed Countries and Bernal, Kaukab and Yus The World Development Report 2005 for the WTO Host countries must focus on creating industry competencies that do not just cater to the current needs of multinational companies operating in the country. Developing countries must not be come dependent on multinational companies and focus on boosting domestic growth. Developing countries should be liberally cautious in accepting FDI to the country so as to ensure the survival of its local industries. It should not take a protectionist approach creating false security in its local industries but only to alleviate the pressures of advantage that multinationals have by reasons of economies of scale. Closer coordination with trade associations and international liberalization agencies will allows for developing countries support and knowledge in dealing with multinational corporations. At the same time, multinational corporations can benefit form the standardization of commerce and industry, decreasing guessing and uncertainty for their ventures. Consideration of social issues can help multinational companies have a better local feel for the host countrys markets. Pubic relations in smaller countries become crucial in building brand and product awareness, purchase and loyalty. It also allows for the feasibility of introducing product extensions and even non-related ventures. Involving multinational corporations in the host countrys environment, community, research and development can establish a more meaningful relationship. Multinational corporations can benefit form having greater involvement in factors that affect its operations. Fears of multinational corporations being insensitive to local concerns can also be alleviated.Conclusion Multinational expansion is but one of the key indications of globalization. liberalisation signifies a countrys acceptance of globalization. Together, multinational corporations and liberalization act as vehicles for development and cooperation. As in all relationships, work must be put in to make it work. Multinationals grow when local economies grow through the development of labor, resources and market expansion. Host countries benefit from the investment, technology manoeuvre and the development of its emergi ng industries. New multinational companies in particular could expand and establish themselves well in developing economies where competition may not as stiff and industries not as crowded as they would be in developed countries. The key is in finding a correspondence between multinational investment and local industry growth and in creating a relationship between multinational corporations and host countries that are base on mutual development.ReferencesBaitu, J. (2006) Globalisation for the Common Good and Social rightness in Sub-Saharan Africa Online. Available from Accessed 12 folk 2006.Bergsten, C. F. (2000) The Global merchandise System and the Developing Countries in 2000 Online. Working Paper 99-6 bring for International Economics. Available from Accessed 12 family 2006.Bernal, L. E., Kaukab, R. S., and Yu, V. P. B. III (2005).The World Development Report 2005 An Unbalanced Message on Investment Liberalization. WTO Institutional Governance and engagement Settlement , of the Trade and Development Programme Geneva, Switzerland.Brown, A. G. and Stern, R. M. (2005) Concepts of Fairness in the Global vocation System. Gerald R. Ford School of Public Policy, The University of Michigan Michigan, USA.Chang, H. 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Jr.(2006) Symbol everywhere Substance Online. Original Article printed in The Wall Street Journal, September 25, 2000. Available from Accessed 12 September 2006.1 Micro-multinational are companies who have small work force and overall scale unlike the traditional multinational corporations. An example is Navin communication theory who have engineering operations in Mumbai, India and headquarters in volume View, California (Multinational Corporations, 2006).