International Management - Global business - Essay Example

Download file to see previous pages... Multinational companies willing to expand their operation in overseas have to face quite few challenges like regulatory environment of the host country, culture and so forth.
In general, the advent of the modern Multinational companies was largely because of the fast industrialization in the western society. The industrial revolution accelerated new technologies of production and distribution that necessitated larger operations than firms had managed before. Conversely, mass production technologies demanded a constant and dependable stream of input, and the pursuit for new economical long term sources of materials and supplies was the incentive that drove many companies in the foreign countries.1 In fact, firms choose to operate in different countries of the world for a good many reasons, as an example, to reap the benefit of economies of scale, cheap labor cost etc. We can see today that extensive number of companies like Coca Cola, Volvo etc. are operating in different parts of the globe. In this paper, the author attempts to shed light on the activities of the multinational companies in relation to various international production theories.
Companies want to expand their business base aboard for mainly "efficiency seeking" and "strategic asset seeking" reasons. ...
intended to capture the benefits of disparity in the availability and cost of traditional factor endowments in different countries of the world 2) the second sort is that which takes place in those countries which have largely comparable economic structures and income levels and is intended to reap the benefits of the economies of scale and scope, and of distinction in consumer tastes and supply capabilities. For instance, many U. S. companies transferring production to lower-cost Mexico and then exporting finished products back to the USA. An example of the second is American investment in European countries. Europe's stable move toward economic integration over the preceding years has given U. S. firms bigger opportunities and scope for attaining increased efficiencies and rationalization.

Among all the purposes for foreign direct investment over the 1990s, strategic asset seeking was amongst the most significant. The aim of the strategic asset seeker is to increase company's prevailing portfolio of assets in such a way that strengthens the firm's existing competitive advantage. Examples of strategic asset seeking investment include Ford's acquisition of Volvo of Sweden and Jaguar of the United Kingdom, and Land Rover from BMW in early 2000, three acquisitions that helped boost the Ford's product niche in the luxury automobile market.2

Global business is now driven by in excess of 60,000 multinational enterprises (MNEs) with over 800,000 subsidiaries in foreign countries. The world's top 100 non-financial MNEs are the main drivers of global production. Their foreign assets amounted to $2 trillion in 2000, with over 6 million employees across the world. They focus mostly in electronics and electrical equipment, automobiles, petroleum, chemicals, and ...Download file to see next pagesRead More