Analyzing Multinational Enterprises

1970 Words8 Pages
MULTINATIONAL ENTERPRISES (MNE’s)

A MNE is an enterprise, which has its services and assets in more than one country. MNE’s have offices and production unit in different countries known as host countries with a head office in the home country where all global management decisions are coordinated. E.G.: Coca-Cola, Toshiba, and Honda. MNE’s play a very important role in globalization.

STRUCTURE OF MULTINATIONAL ENTERPRISES

MNE’s have three different and unique structures (transnational corporations,2011)

Horizontally integrated MNE’s: Horizontal integration is a plan where a company manages its production units in different countries to manufacture identical products. The soft drink company is the best example for horizontal
…show more content…
Trade barriers:

The company would decide to go to a the overseas market with its operations, if the tariff and non-tariff barriers are not favourable for the company.

Regulations:

If the government in which a company exists has a lot of restriction, the company would want to move to location with fewer regulations.

Customer demands:

The company would go global if it realises that the overseas market has potential demand for the product.

2. Proactive/aggressive:

Cost savings & access to resources:

The main reason to go overseas can be cost saving and access to resources. By going global a company would have access to thousands of suppliers through the company would the best product at the best price.
Access to large market of buyers:

When a company goes global, it has access to thousands of buyers leading to profit maximization and create a better brand image.

EMERGING MARKET

Emerging markets is a concept used to define a developing country. It is a country, which is rapidly progressing towards industrialization and globalization (Financial Times) E.g.: India and China are the most attractive emerging market for any business.

Developing countries on the rise:

1950 2007 2050
China China India
Soviet Union India China
India United States United States
United States Indonesia Indonesia
Japan Brazil Ethiopia source: US Census Bureau (IDB,2009)

Developing countries → Emerging markets

Source: by Dr. Jonathan Pdoh

STRATEGIES
Get Access