81339303 why corporations become multinationals
Why do firms become multinational enterprises? Identify and discuss four reasons, making sure to incorporate examples into your answer.
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Institutional Affiliation
Why do firms become multinational enterprises? Identify and discuss four reasons, making sure to incorporate examples into your answer.
Multinationals are corporations which operate in at least two countries but whose management is established in one specific country. They have their operations in at least one other country different from the home country where the management is based. In the current world, multinationals control a substantial market share of all manufacturing companies. Globalization has had a positive impact on multinational organization and has enabled many corporations to expand their production to multinational levels by providing better ways of transport and communication. After the Second World War, the rate of organization going multinational significantly increased. Many organizations have adopted multinational production for it has an array of benefits to the organization, the general public of the host country and the governments of both the domestic and the host country.
The most fundamental reason why corporations expand their production to multinational levels is the basic desire of maximizing sales and profits (Maheshwari, 2000, p 246). Corporations expand to enjoy the advantage of ownership. They capitalize on this by patenting their products, keeping production secrets and ensuring their brands are unique from the rest in the market hence difficult to forge. Though the idea of expanding production to the international platform may sound quite appealing, the management must ensure that they conform to the necessary standards and maintain quality as the controlling bodies of the host country can be not only very different from the domestic but also very strict. A good example is the coca-cola and Nike companies which have production branches all over the
Name
Institutional Affiliation
Why do firms become multinational enterprises? Identify and discuss four reasons, making sure to incorporate examples into your answer.
Multinationals are corporations which operate in at least two countries but whose management is established in one specific country. They have their operations in at least one other country different from the home country where the management is based. In the current world, multinationals control a substantial market share of all manufacturing companies. Globalization has had a positive impact on multinational organization and has enabled many corporations to expand their production to multinational levels by providing better ways of transport and communication. After the Second World War, the rate of organization going multinational significantly increased. Many organizations have adopted multinational production for it has an array of benefits to the organization, the general public of the host country and the governments of both the domestic and the host country.
The most fundamental reason why corporations expand their production to multinational levels is the basic desire of maximizing sales and profits (Maheshwari, 2000, p 246). Corporations expand to enjoy the advantage of ownership. They capitalize on this by patenting their products, keeping production secrets and ensuring their brands are unique from the rest in the market hence difficult to forge. Though the idea of expanding production to the international platform may sound quite appealing, the management must ensure that they conform to the necessary standards and maintain quality as the controlling bodies of the host country can be not only very different from the domestic but also very strict. A good example is the coca-cola and Nike companies which have production branches all over the
References: Leontiades, J. (1987). Internalization of Business and Business Strategy Multinational Corporate Strategy: Planning for World Markets New York, NY: Lexington Books. Dssing, H. (2010). Reasons for a Company to Become a Multinational Corporation Retrieved January 4th, 2014, from https://suite.io/heino-dossing/3fze25a Chen, J. (2004). International Institutions and Multinational Enterprises: Global Players-- Global Markets (p.185). Northampton, MA: Edward Elgar Publishing. Tolentino, P. (2000). Multinational Corporations: Emergence and Evolution (p.29). New York, NY: Psychology Press. Maheshwari, R. (1997). Multinational corporations. In Principles of Business Studies (Vol. 1, p. 246,247). New Delhi: Pitambar Publishing. BBC, (2014). Multinational Organizations Retrieved from http://www.bbc.co.uk/bitesize/higher/business_management/business_enterprise/business_contemporary_society/revision/13/ Alkhafaji A. (1994). Competitive Global Management – Principles and Strategies. Delray Beach, FL: CRC Press. Gilroy, B., Gries, T., & Naude, W. (2006). The Changing View of Multinational Enterprises and Africa Multinational Enterprises, Foreign Direct Investment and Growth in Africa: South African Perspectives New York, NY: Springer Science & Business Media. Haley, U. (2001). Multinational Corporations as Catalysts. In Multinational Corporations in Political Environments: Ethics, Values and Strategies. Hackensack, NJ: World Scientific.