Factors That Lead The Emerging Market Multinationals Into Essay

The substantial part of the article concentrates on the way companies and their managers should embrace contemporary multinational market. The author claims: “Adaptation strategies are better suited to opportunities opened by the shift in the locus of teh global growth. (..)Western markets must compete in big emerging markets like China and India. But they can;t forcé their way in.” That is why, it is critical to pay careful attention to political, economic, or cultural diversity. Ghemawat is skilled in giving pieces of advice to those who underestimate the importance of countries differences and similarities. He also says: “I propose that every MBA gradúate – and presumably every global manager – have a mínimum body of globalization related knowledge, including (..)an understading of how differences between countries can influence cross-border interactions; awareness of the benefits of teh additional cross-border integration’.

Foreign Direct Investments are long term capital holdings directly invested in one country by another country. These foreign direct investments can be either outwards or inwards. The outward foreign direct investment is also referred to as investments abroad and is usually supported by the government against various types of risks associated with the investment1. It is also able to enjoy various types of incentives such as tax incentives. These are usually the investments invested by the country in to a foreign

On the one hand, as mentioned before we can observe that there are positive consequences for the worldwide economy. The countries that are part of the globalised world gain many advantages, such as the absence of economic barriers. Since the lack of barriers between countries the markets all over the world have increased in terms of goods and services. In other words, capital movements are set on a global scale in which multinationals play a crucial role. Multinational corporations are those which not only act in their home country, but also in others called host countries. Some examples are Coca-Cola, McDonald´s or

An added benefit of foreign direct investment is that it helps the balance of payments of both capital and current accounts of the host country.

Globalization can be seen as a process of collaboration and integration of companies, governments, and citizens of the world; the process is driven by international trade and investment and affects societies across the globe, including their cultures and politics. While the concept of globalization has spiked in conversation over the past few decades, the basis and application it is founded upon is not exactly a new innovation as societies have bought and sold with each other for thousands of years on various exchanges. The expansion of globalization, or what we have come to recognize as globalization, has arisen through policies developed within countries that have left the door open to both international and domestic trade. Increases of efficiency in technology have equally propelled globalization as the world has gained the ability of near-immediate, constant communication. Information technology development has assisted "economic actors," or those consumers, investors, and multinational corporations, the tools for rapid growth, such as easy transfer of assets and better ability to analyze the global economy (Globalization101). This project will use the understanding of globalization in an analysis of multinational corporations and their impact on the world. Trade theory, along with research conducted on relevant topics, are utilized when looking at the value of multinational corporations in the world economy, the effects of outsourcing on both the country of origin and

Foreign direct investment (FDI) is an investment in a business by an investor from another country for which the foreign investor has control over the company purchased. The Organisation of Economic Cooperation and Development (OECD) defines control as owning 10% or more of the business. Businesses that make foreign direct investments are often called multinational corporations (MNCs) or multinational enterprises (MNEs). A MNE may make a direct investment by creating a new foreign enterprise, which is called a greenfield investment, or by the acquisition of a foreign firm, either called an acquisition or brownfield investment.

There are certain reasons associated with the rapid growth of multinational corporations during the last 50 years. Including but not limited to globalization, information technology & telecommunication, deregulations and worldwide market liberalization and the operation in the emerging economies and the growth opportunity in these countries.

Over the years, Multinational corporations (MNCs) have been a source of controversy ever since the East India Company developed the British taste for tea and a Chinese taste for opium (Stopford, 1998). A typical multinational corporation (MNC) normally functions with a headquarters that is based in one country, while other facilities are based in locations in other countries. In some circles, a multinational corporation is referred to as a multinational enterprise (MNE) or a transnational corporation (TNC) (Tatum, 2010). They enter host countries in different ways and different strategies. Some enter by exporting their products to test the market and to find whether their existing products can gain sizeable market share. For such firms,

To begin with, legal and economic hurdles are some of the most significant problems MNEs seeking to further enhance their global presence encounter. Each and every country conducts its political, legal, and economic undertakings in a unique way. For this reason, MNEs seeking to exploit opportunities in emerging markets have to contend with various taxation, institutional, as well as legal challenges that effectively make their forays into the said markets even more complicated. MNEs also encounter problems in regard to language differences. This is more so the case given the relevance of effective communication in business transactions. Cultural differences could also make internationalization much more challenging. Some of the largest multinational corporations with operations across the globe include but they are not limited to Gillette, Pampers, and Coca-Cola. These three companies according to Gitman and McDaniel (2008) rake in more revenues from their global operations than they do from their home markets. In addition to saving significant sums of money in labor costs, multinational corporations according to Gitman and McDaniel (2008) can also be able to further enhance their operations by taping new technology from across the world.

The study of the internationalisation process of emerging market multinationals (EMNCs) has gained prominence in the last two decades. This is as a result of the economic growth and transformation witnessed among the emerging markets (EM) and the growth of EMNCs. The internationalisation phenomenon has resulted in a surge of interest from international business (IB) scholars (Athreye & Kapur, 2009; Hoskisson, Eden, Lau, & Wright, 2000; Hoskisson, Wright, Filatotchev, & Peng, 2013; Jormanainen & Koveshnikov, 2012). A critical observation of extant literature shows, however, that Asia and Latin America has dominated the study of EMNCs internationalisation for many years (Child & Rodrigues, 2005; Cyrino, Barcellos, & Tanure, 2010; Eren-Erdogmus, Cobanoglu, Yalcın, & Ghauri, 2010; Fortanier & Tulder, 2009; Olaya, Olaya, & Cuéter, 2012; Sim, 2005) and Bianchi, (2014). Sub-Saharan Africa (SSA) firms have also emerged as high profile multinationals increasingly engaged in foreign expansion especially across the region. Such firms for examples include MTN, First Bank of Nigeria, Eco bank of Senegal, Dangote, ShopRite, Equity Group holdings, Globalcom, SABMiller of South Africa, InterSwitch and Computer Warehouse Group to mention a few. These multinationals are emerging across different sectors, taking advantage of their home country business environment to internationalise (Initiative for Global Development and Dalberg Global Development, 2011; William, 2013). However, emerging SSA

Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra-company loans".

Going global has become an obvious choice for multinational companies. But spreading across the globe is not a secret to success or revenue generation, on itself. The opportunities in international markets have shown significant growth and potential for multinational companies. The capital, technology and skills of multinational companies invested in the local markets have created a good economic situation in the host countries. The developing countries have benefitted from the brand’s new standards, quality goods and low prices. The host country also benefits from either positive or neutral employment options. Foreign direct investment is having substantial impact on different economies in different ways. But nevertheless all these benefits in the developing markets are very small when compared to the potential market it offers to the international companies. According to Keeler (2015), multinational companies have been shifting their focus extensively towards developed countries as well. The key with the developed countries is their productivity and technological developments. The increase is from half to two-thirds when compared to 2013. Multinational companies across the globe have increased productivity and have brought into good practices in the food retail industry both in the developed and developing countries. But the truth is no company has been able to establish themselves as a global dominator in the market sector. In the

The companies mainly focuses of their innovation, strategic management and organizational structure to expand their business in international level.According to the United Nations Conference on Trade and Development (UNCTAD, 2013), the outward foreign direct investment (OFDI) by firms from these economies accounted for 30.6% of the global (OFDI) flows, which was $1.39 trillion in 2012.The above statement is a crystal clear proof that emerging economies like China, Brazil, Russia and India are working towards the restructuring of their international business. MNC’s from emerging economies, although diverse, have displayed some common characteristics that differ from their counterparts from developed countries (Xueli Huang, 2015).Emerging economies lack so many aspects like the know-how of that particular industry, the technology required by these business enterprise, but in spite of all the lack of primary resources they have cherished because the home government of emerging economies plays a vital role in helping to get the resources for them to expand the business.

With globalization and development of advanced communication systems, many firms and corporations are becoming multinational enterprises. The term multinational firm describes the situation in which a firm extends beyond the borders of its individual mother country, state or nation and operates with affiliates and branches in more than two countries. Multinational firms also extend beyond continental boundaries and hence it’s always desirable to understand the reasons and factors which prompt firms to go multinational. In most cases, multinational firms replicate the same products in their host market. However, others distribute the phases of productions beyond their nation boundaries as a way of integrating the whole process (Contessi,

Couple of years before the policy maker decided to lower down the tariff barriers and to give permission for foreign investment. Multinational companies have started rushing into countries where they wanted to achieve the market position (Arindam K. Bhattacharya and David C. Michael) The entry of multinationals is good for the country as they bring