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A Multinational Enterprise - Essay Example

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This essay analyzes that a firm or an organization is a partnership between two or more people to do business together. This business could be production or delivery of service to earn a profit. Their operations include economic activity to produce products or services…
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A Multinational Enterprise
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Download file to see previous pages This business could be production or delivery of service to earn the profit. Their operations include economic activity to produce products or services and then sell them to the middleman or end consumer to earn the profit. (Cyert and March 1992)Firms could be local or national delivering its products and services to a very smaller audience or to the whole country. They do not have any foreign investment or delivery of product and services to other countries in any form.
A multinational enterprise can be defined as a corporation that produces products or delivery service in more than one country. Over the years many definitions of multinational have come into academia as there has always been a conflict on defining them in one way. One of the definitions declared Multinational enterprise as “An enterprise that engages in Foreign Direct Investment (FDI) and owns or controls value-adding activities in more than one country” (Dunning and Lundan, 2008) Some of the famous multinational enterprises known by all include Microsoft, Nokia, Coca-Cola, Nike, IBM, Proctor and Gamble, and Unilever. The biggest chunk of these corporations belongs to the USA and then Japan. (Kogut and Zander, 2003)
Now the firms and multinationals have been discussed, the main part of the essay to understand why and how firms become multinational enterprise will be discussed. In the first part of the discussion, the article covered why firms become multinational enterprises and in the second part article will elaborate the “How” question. In the next part of the essay, firms will be referred to as national firms.
National firms can only expand to a certain point, they can reach a certain number of customers, sell a certain number of products and eventually there comes a point when they can only earn a certain amount of profit. That is the point where they look to expand to other countries.  ...Download file to see next pagesRead More
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