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Liberalizing Trade Between Developed and Developing Countries for Multinational Corporations - Term Paper Example

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This paper highlights the issues that multinational corporations have to address in liberalizing trade between developed and developing nations. The writer suggests that all nations can gain from MNCs as they have huge funds and cutting-edge technology to offer to the developing nations…
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Liberalizing Trade Between Developed and Developing Countries for Multinational Corporations
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Extract of sample "Liberalizing Trade Between Developed and Developing Countries for Multinational Corporations"

Download file to see previous pages Liberal trade policies, incentives, growing foreign direct investment (FDI), advancement in information technology, and communication have all stimulated the process of globalization (Lee & Tai, 2006). A multinational corporation (MNC) is the most powerful institution today. A multinational corporation can be defined as a corporation that engages in international production and that bases its management decisions on regional or global alternatives (Savitsky & Burky, 2004, p4). MNCs recognize the newly emerging markets in the developing countries and the transition economies as opportunities for expansion across borders and foreign markets. To enhance shareholder wealth and to improve cash flows, multinational corporations have to enact strategies. According to Savitsky & Burky, MNCs expand across barriers in two ways – trade and Foreign Direct Investment (FDI). The role of multinationals is enhanced because they provide the funds, jobs, and technical expertise to the host country.
Multinationals, before venturing into a foreign market have to take into consideration various factors like the macro environment, which include government regulations and policies and demographics. Other complexities and uncertainties include consumer behavior. Apart from these, three major issues require careful planning before venturing into another region, which includes the right marketing mix, sourcing, of the product, and investment decisions (Qdi). Huge investments are required to enter an overseas market before the utilization of investment comes. While new technologies and liberalizations have helped big multinationals to increase their efficiency and reach, these very forces pose a challenge from the smaller firms. The smaller firms are a threat to the big corporations as they too capture the market and are in the race for the same products and services. ...Download file to see next pagesRead More
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