The Multinational Enterprise By Aziz Ahmed Chaudhry
IntroductionA company headquartered in one country buthaving operations in one or more othercountries.Example:Nestle the chocolate manufacturer is a Swisscompany.
Characteristics of MultinationalEnterprises Their affiliates must be responsive to a number of important environmental forces. It draws on a common pool of resources, including assets, patents, trademarks, information and human resources. It links together the affiliates and business partners with a common strategic vision.
The internationalization process It is a process by which a company enters a foreign market.
Major types of foreign entry Exporting and uses a local agent or distributor Export through own sales representative or sales subsidiary Local packaging and/or assembly Foreign direct investment
Why firms become multinationalenterprises? A desire to protect themselves from the risks and uncertainties of the domestic business cycle A growing world market for their goods or services A response to increased foreign competition
Why firms become multinationalenterprises? A desire to internalize in order to reduce costs A desire to overcome tariffs barriers And the chance to take advantage of technological expertise by manufacturing goods directly rather than allowing others to do it under a license agreement
The strategic philosophy ofmultinational enterprises It is different from that of home country businesses. MNEs do not see their company as an extension of its domestic roots. They hire, fire, and transfer personnel to meet global needs They also combine their talents with those of other MNEs in creating, financing and managing joint ventures.
The strategic management process Identification of the firm’s basic mission External and internal environmental analysis Formulation of objectives and overall plans Implementation of these plans Evaluation and control of operations