The multinational enterprise

THE MULTINATIONAL ENTERPRISEBy Israr K.Raja

Introduction

MNE is a company whose headquarter is in one country but having operations in one or more other countries.

Example:

Nestle the chocolate manufacturer is a Swiss company.

Definition of MNE

A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation.

Multinational Enterprises

Characteristics of Multinational Enterprises

Their affiliates must be responsive to a number of important environmental forces.

It draws on a common pool of resources, including assets, patents, trademarks, information and human resources.

It links together the affiliates and business partners with a common strategic vision.

The Environment of MNEs

The internationalization process

It is a process by which a company enters a foreign market.

Entry into foreign markets: the Internationalization process

Major types of foreign entry

Exporting and uses a local agent or distributor Export through own sales representative or

sales subsidiary Local packaging and/or assembly Foreign direct investment

Why firms become multinational enterprises?

A desire to protect themselves from the risks and uncertainties of the domestic business cycle

A growing world market for their goods or services

A response to increased foreign competition

Firms become multinational enterprises!

The strategic philosophy of multinational enterprises

It is different from that of home country businesses.

MNEs do not see their company as an extension of its domestic roots.

They hire, fire, and transfer personnel to meet global needs

They also combine their talents with those of other MNEs in creating, financing and managing joint ventures.

The strategic management process

Identification of the firm’s basic mission External and internal environmental analysis Formulation of objectives and overall plans Implementation of these plans Evaluation and control of operations

The strategic management process

The strategic management process in action