Free

Success of Russian Multinational Corporations - Essay Example

Comments (0) Cite this document
Summary
The essay "Success of Russian Multinational Corporations" discusses the reasons why the resource-based Russian MNCs succeeded in the internalization strategy through export of product followed by the acquisition of foreign assets and the later establishment of subsidiaries…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER92.8% of users find it useful
Success of Russian Multinational Corporations
Read TextPreview

Extract of sample "Success of Russian Multinational Corporations"

Success of Russian Multinational Corporations (MNCs) The resource-based Russian MNCs succeeded in the internalisation strategy through export of product followed by the acquisition of foreign assets and the later establishment of subsidiaries due to three reasons explained below.
Most SOE had a network of subsidiaries in many parts of the Soviet Union referred to as union enterprises owing to the operational by the Soviet Ministry of Central Planning (Filippov, 6). Suppliers and customers were chosen by the government; therefore, MNCs located in Moscow easily exported to these Soviet Republics before the split. However, the disintegration of the Soviet Union led to the loss of the supplier and customer links owing to the establishment of tariff and non-tariff barriers with the effect of the purchase of subsidiaries by the MNCs in these CIS countries. The organisation of the Soviet Union explains why the Russian MNCs adopted the export strategy before the establishment of subsidiaries.
The other reason for Russian MNCs choice of internalisation strategy was seeking markets for their products and a gaining a good understanding of the market before committing more resources in the form of purchase of subsidiaries. Russian MNCs had to have a feel of the market in terms of profitability and market conditions through export of products, the success in these goals allowed for further investment in terms of purchase of assets and set up of subsidiaries.
The need to reveal shareholder structure and ensure transparency in operations affected the ability of Russian MNCs to set up new subsidiaries early in the internalisation strategy owing to the effects of “cowboy capitalism” (Filippov, 7). However, a better understanding of the market after exports and success in the market allowed the MNCs to purchase subsidiaries.
The other reason for the choice of the above-mentioned internalisation strategy was the need to exploit efficiency through seeking channels for economies of scale in production. Producing locally for a large market and supplying through exports was the initial manner in which the Russian MNCs achieved this goal. Understanding the global market and gaining access to resources in the host countries allowing for cheaper production resulted in the acquisition of assets and the subsequent set up of subsidiaries in these markets.
Work Cited
Filippov, Sergey. Russias̕ Emerging Multinationals: Trends and Issues. Maastricht: UNU-MERIT, Maastricht Economic and Social Research and Training Centre on Innovation and Technology, 2008. Internet Resource. Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Success of Russian Multinational Corporations Essay”, n.d.)
Success of Russian Multinational Corporations Essay. Retrieved from https://studentshare.org/business/1678386-success-of-russian-multinational-corporations
(Success of Russian Multinational Corporations Essay)
Success of Russian Multinational Corporations Essay. https://studentshare.org/business/1678386-success-of-russian-multinational-corporations.
“Success of Russian Multinational Corporations Essay”, n.d. https://studentshare.org/business/1678386-success-of-russian-multinational-corporations.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Success of Russian Multinational Corporations

Multinational Corporations

...? MULTINATIONAL CORPORATIONS of the School: Introduction Multinational corporations are large firms operating in more than one country. They usually have their headquarters in one country mostly the mother country. There are many multinational corporations in the world today. For instance coca cola, Barclays, shell, Guinness Breweries, DHL, IBM, MTN and others. The presence and establishment of MNC in developing countries has brought a lot of debates all over the world. Globalization-brought about by advancement in technology, transport, and communication- has made it possible for multinational...
7 Pages(1750 words)Essay

Multinational corporations and sweatshops

...Multinational Corporations and Sweatshops Introduction Today industrialized countries have favored contracting out ofproduction to the suppliers in the third world countries. By doing this, the industrialized countries have contributed to international division of labor. For instance, globalization of production in apparel and footwear companies such as Reebok and Nike has led to international division of labor. Here, the two companies major in product designing and marketing but rely on a number of contractors to build shoes and sew clothes that suit their specifications. One of the chief expectations by the two companies is high quality goods. In addition, they expect the suppliers in developing...
6 Pages(1500 words)Essay

International Business Questions

...to local pressures; that means, to pursue local strategies which address the domestic/local market and global strategies which target the international market. Indeed, were multinational firms to eschew the imperatives of adaptation to the local market and the design of strategies which address its characteristics, they would probably be perceived of as an alien entrant into the market, thereby arousing consumer resistance (Reed, 1997; Rugman, 2001). Were they, however, to pursue local/domestic or regional strategies, they would be perceived of as part of the market in question, thereby offsetting the potential for consumer resistance. In other words, and as Rugman (2001) emphasises, the success of...
6 Pages(1500 words)Essay

Multinational corporations

...Globalization "Human societies across the globe have established progressively closer contacts over many centuries, but recently the pace has dramatically increased. Jet airplanes, cheap telephone service, email, computers, huge oceangoing vessels, instant capital flows, all these have made the world more interdependent than ever. Multinational corporations manufacture products in many countries and sell to consumers around the world. Money, technology and raw materials move ever more swiftly across national borders. Along with products and finances, ideas and cultures circulate more freely. As a result, laws, economies, and social movements are forming at the international level. Many politicians, academics, and journalists treat... without...
12 Pages(3000 words)Essay

Multinational Corporations

...Running Head: Role and Behaviors of Multinational corporations Role and Behaviors of Multinational corporations Name: Course: College: Tutor: Date: Multinational corporations refer to business entities with operations in many countries. The headquarters of a multinational corporation are normally located in one country whereas the facilities are based in other countries. This model enables the company to enjoy the full advantages of incorporating in a certain locality and also the ability the cost production advantage i.e. the ability to...
2 Pages(500 words)Essay

Multinational Corporations

...MULTINATIONAL CORPORATIONS Introduction The end of cold war and the disintegration of the Soviet Union turned the world once polarized into two distinctive blocks into a singular entity which groped with its existence over a period of one and a half decade, until it achieved the present status. New as well as developing nations ran over one another to grab whatever opportunity they got to establish their identity in the new world scenario. The last few years have seen the development of rapid communication and transportation means in the world due to computerization and information technology. This has opened up new vistas and opportunities for the large corporations who are increasingly...
4 Pages(1000 words)Essay

International business and multinational enterprise

...Introduction In the highly competitive business environment, the role of government is increasingly becoming critical to the socio-economic development of the states across the world. The rapid globalization has transformed the dynamics of the market and necessitates government initiatives to create congenial environment for foreign businesses. The paper would be discussing the role of government in promoting international businesses and entry of foreign businesses like multinational corporations in Russia. Literature review would be used to emphasize the ways and means the governments help the international businesses to flourish and help local and national economy. It would also show why the Russia has...
8 Pages(2000 words)Essay

Multinational Corporations

...Survey: Multinational Corporations Multinational Corporations Hypothesis – Foreign companies are doing more and more harm to the American economy The survey was intended to study the effect of multinational corporations on the economy of the US. In order to achieve this, a survey was conducted. The respondents were asked quite a number of questions and their responses were recorded and represented in graphs and charts. The first question asked whether the respondent had a family member who worked for a multinational corporation. 100% of the respondents said “Yes”, meaning that every family in USA has at least one member who works in a multinational corporation. All the four respondents also thought that multinational companies... are...
2 Pages(500 words)Essay

UAE Multinational Corporations' Strategies

...UAE Multinational Corporations’ Strategies The business world has become so competitive. Management development techniques help an organization to compete fairly in business. Good management techniques include understanding the internal and external factors that affect the organization. An organization needs to analyze and come up with measures to help it prosper. Being profitable is the desire and objective of every organization. The global economy also influences the performance of multinational companies. This paper reviews the management development techniques employed by United Arab Emirates (UAE) multinational (Curwen and Whalley, 2008). An international business is an enterprise or entity that is involved in commercial... , the value...
10 Pages(2500 words)Term Paper

International Business -

...be expected of a multinational corporation. While comparing it to the Dunning’s model (1988), it would be expected that with a less developed home country, they would be more likely to reinvest in their own market (Gorynia et al. 2010). The result of this would be the development of a country level comparative advantage. However, Russian corporations have focused more on expanding internationally rather that reinvesting in their own base country. International investment theory may be an important tool in predicting that Russian firms would first put into their own particular commercial center, and, as these organizations developed to worldwide levels of...
11 Pages(2750 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Success of Russian Multinational Corporations for FREE!

Contact Us