A multinational enterprise (MNE) is a company headquartered in one country that has operations in one or more other countries. MNEs draw on common resources and link together affiliates with a shared strategic vision to respond to environmental forces in multiple countries. Firms become MNEs to protect themselves from domestic economic risks, access growing foreign markets, respond to competition, reduce costs through internalization, overcome tariffs, and take advantage of technological expertise. MNEs see themselves as global rather than an extension of their home country and manage personnel to meet worldwide needs through strategic processes like joint ventures.

1. The Multinational Enterprise
By Aziz Ahmed Chaudhry

2. Introduction
A company headquartered in one country but
having operations in one or more other
countries.
Example:
Nestle the chocolate manufacturer is a Swiss
company.

3. Characteristics of Multinational
Enterprises
 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.

4. The internationalization process
 It is a process by which a company enters
a foreign market.

5. 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

6. Why firms become multinational
enterprises?
 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

7. Why firms become multinational
enterprises?
 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

8. The strategic philosophy of
multinational 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.

9. 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