Why Should Multinational Corporations Work Effectively to Meet Customer Requirements - Case Study Example

? General Motors Company al affiliation: U.S multinational companies have been found to be helpful in developing various processes in the nation, and also attaining requirements of the global market. The General Motors Company has been analyzed as one among the automotive companies that help in designing, building and selling vehicles in the world market. This has helped ensure that nation with vehicle requirements as well as spare parts have attained the required vehicle and spare part types. The firm has developed strategies to help deal with various issues related to prices in its revenues and costs in terms of currency denominations. The company has diverse operations, which are undertaken in the global market and have been found to influence operations and contribution to the firm’s profit. The company also implements diverse hedges against risks associated with exchange rates. However, there are effects of increase and decrease in the dollar’s exchange value on the firm’s profitability. The company has also established schemes to reduce the effect of the dollar exchange to the business operations. General Motors Company Introduction There are various multinational companies in the United States (U.S) that have been found to focus on diverse fields of operations. These companies have been analyzed and found to influence process involved in growth and development in diverse nations positively. This has also been found to create a conducive environment for improvement of individual’s living standards among individuals from diverse communities in the nation. Therefore, strategies have been implemented to enhance operations undertaken by the Multi-National Enterprises in U.S. General Motors is one among the MNE’s in U.S dealing with automotive. This company has been well known to deal with issues related to designing, building and selling of vehicles in the world market, which can be considered as the best, with structures that have relatively low prices and considerably sound balance sheet (Feldstein, Hines & Hubbard, 2007). In terms of currency denomination, there are schemes that have been implemented by GM Company to work on its prices of revenues and costs. Analysis indicate that, when the dollar is considered firm, foreign goods, travel and services have been found to be cheap among individuals living in America. However, it has been noted that the American dollar has been weakening over the years, and individuals from other nations have travelled to the U.S as foreign currency is also appreciating. Currency denominations have been found to vary, and this influences export and import price rates in different nations. Therefore, the company managers have established a method that enables other companies from diverse nations to access various goods and services produced by the company (Sinha & Sinha, 2009). This has been attained by evaluating the exchange rates between the U.S company price rates and the partnering nation. The company lowers the price rates of its revenues and costs to nations that have been considered as developing. Also, they should have a greater range of currency difference with the American dollar. This has helped influence development of diverse nations, despite the fact that, the nation is considered to be developing. Nations that are equal and exchange their currency at fairly same price with the Americans have goods and services offered to them at relative same prices as the export price in the U.S. This has helped the company manage its prices, and reduce cases of loss being experienced in the organization (Feldstein, Hines & Hubbard, 2007). Therefore, the GM Company managers have used schemes that have been considered effective and efficient in ensuring individuals from diverse nations gain access to various spare parts and vehicles at prices that are considerably low and affordable based on their denominational currency. Operations undertaken by MNE's with multiple foreign operations include engaging in productions that are foreign. This is attained through affiliates of the MNE located in various nations. Foreign productions help in developing the global market, and also attracting more customers form different nations (Tempalski, 1982). This has helped the parent firm’s profit, in ensuring the number of customers from foreign nations is increased, which helps improve operations in the company. The standard of goods and services in the organization has also been improved as the global market has been found to change from time to time. Therefore, the company management team has to ensure various operations undertaken in the company have attained primary requirements of the global market. The MNEs also decides and implements decisions that help diverse organizations in staffing, finance, marketing and production processes, which are aimed at ensuring various organizations attain its goals and objectives. This helps the developing companies understand basic requirements of operation, and also provide a guideline that is aimed at success as well as, efficiency and effectiveness in its operation (Tempalski, 1982). In this case, the parents firm’s profits are increased, as companies adopting decisions implemented by the MNEs help in marketing the organization. This helps increase the number of customers in the company, which also helps increase processes involved in growth and development of the company. GM Company has a hedge that has been established against the exchange rate risk. This has been attained by enacting rules and regulations that help govern diverse operations in various departments in the company. These rules help ensure that resources used in the company have been analyzed, and their cost checked keenly. This helps ensure there are no cases of losses encountered in the company as some resources are purchased at high costs from other nations which have relatively high exchange rates (Sinha & Sinha, 2009). The other scheme established by GM Company to help deal with such issues include developing partnerships with other companies from different parts of the world. This helps ensure there is an understanding in the trade operations undertaken by the GM Company and the other companies. Companies that have been established and partner with GM Company from other nations help develop an understanding. This helps the company make a profit despite the fact that exchange rates have been found to be changing frequently. This has been found to immensely influence operations undertaken by the company, as developing joint venture partnership with companies from other nations provides an assurance that the company will export its products. This will be enhanced by the relationship existing between the company managers, which will also influence diverse operations undertaken in different nations (Feldstein, Hines & Hubbard, 2007). Increase in the dollar’s exchange value has been found to create an immense influence to the firm’s profitability. The company’s profitability is found to increase with an increase with the exchange rate. This is primary because, exchange rates can be found to increase and the previous costs used in production of various products in the company are low. This helps improve the profitability ratio of the company at higher rates. On the other hand, decrease in exchange rates has been found to create a negative impact to the organization profitability rates. Decrease in currency exchange rates clearly indicates that the company has to apply the current rates in its operations, which might not be the case in other nations where resources to be used in the company are bought. This means that, the cost of resources will be higher than the cost of benefits experienced in the organization, which creates a non-conducive environment for the company to develop and improve its production in various departments (Feldstein, Hines & Hubbard, 2007). Conclusion GM Company is one among the MNEs in the automotive industry that have been found to be effective and efficient in attaining customer requirements. This has been made possible by the managing group, which has enacted laws and regulations to govern operations being undertaken in the company. The GM Company managers have also established schemes to help ensure that issues related to prices in revenues and costs have been identified and solved. This helps ensure there is maintenance of processes involved in growth and development of the company, which has also been found to influence various operations in the nation. There have been strategies that have been implemented to improve various operations in the company, and this includes being in partnership with companies from other nations. This has helped solve various problems associated with changes in exchange rates, as the companies will still carry out transaction based on laid down agreements. This is despite the concept that, there is change in exchange rates. Recommendations MNEs should work effectively and efficiently to ensure that customer requirements have been attained, as well as requirements in the global market. This will help improve economic standards of different nations, as well as living standards of individuals in various communities in the world. The government should also give a helping hand to the MNEs, to ensure there is availability of resources to be used in various operations undertaken in the companies. This will help improve organization performance and also improve rates of development in the nation. Changing currency rates should also be checked by the government officials, to ensure this does not influence operations undertaken in diverse departments in the MNEs, as this will also influence economic development of the nation. References Feldstein, M., Hines, J. R., & Hubbard, R. G. (2007). Taxing Multinational Corporations. Chicago: University of Chicago Press. Sinha, P. K., & Sinha, S. (2009). International Business Management. Bangkok: Excel Books India. Tempalski, J. (1982). Floating exchange rates and U.S. competitiveness: investigation no. 332-124 under section 332 of the Tariff Act of 1930. New York: U.S. International Trade Commission. Read More