Professional Documents
Culture Documents
Multinational Corporation (MNC)
Multinational Corporation (MNC)
Must have SUBSTANTIAL DIRECT INVESTMENT in foreign Countries Must be engaged in ACTIVE MANAGEMENT of these offshore assets STRATEGIC & ORGANIZATIONAL INTEGRATION
Need to secure suppliers (raw materials) Market-seeking behaviors (new markets, when
local market is saturated)
Technological Motivations
Economic Motivations
Social Developments
Increasing Scale Economies Technological Advances increase Efficient Scale Production Shortening PLC Information Transfer Cultural Convergence
MNCs can leverage investments and revenues from one subsidiary to another to optimize profits
(manipulate the P&L in each subsidiary, depending on taxes)
DISTINCT COMPETENCY to overcome being foreign ORGANIZATIONAL CAPABILITY to leverage its strategic assets internally (subsidiaries) rather than externally (contractual agreements) LOCATION SPECIFIC ADVANTAGES (traditional or emerging motivations)
Motivation is NOT ENOUGH for Success in Foreign Markets Foreign Companies have a DISADVANTAGE relative to Local Co.
International Mentality
Multinational Mentality
What is different for this market? How I deal with the difference?
Flexible approach
Country-specific approach
(repeating)
Global Mentality
Not the entire Co but the product line
(standardization ex.Coca)
The World is the unit of analysis Creates products for the World Market
(standard products decrease costs)
(Global
Efficiency & Flexibility across markets Country-level operations are Interlinked Resources & activities are Integrated into a Network of World-Wide Operations Rationalization (future investments to increase
efficiency and effectiveness)
Performance Measurement
Multiple Currencies/Exchange Rate Fluctuations Accounting Methods/Laws Functional & Geographic Diversity
Competitive Strategy
Global Basis