How A Mnc Effect Or Effected By Home & Host Country Environment

To be qualified as a multinational company (MNC), two criterions need to be fulfilled. Firstly, it needs to have substantial direct investments in foreign countries. Secondly, these international operations need to be actively managed (Bartlett, Beamish, 2014). Since

MNC’s/TNC’s are companies that locate their factories in various places throughout the world. This gives countries more jobs, access to the global market, cheap manufacturing and large profits.

MNC’s may potentially bring a lot of benefits to the host nation, the company may invest in the host country and creating wealth and jobs. Multinational can raise the grown rate of the host country by bringing in new investment, new technologies or managerial competition, thereby induce their domestic rivals to become more innovative and competitive.Their size and scale of operation enables the company to benefit from economies of scale enabling lower average costs and prices for consumers. (Resource book)

Multinational corporations are companies that have branches and operations in two or more countries. These companies are the main results of globalization, since they operate all over the world as if it was one country. Multinational corporations have a home country which contain their headquarters and offices for management and have host countries in which their operations take place. The home countries of multinational corporations are usually developed countries that have great capitals and the host countries are developing countries due to the low costs of labor, raw materials, and taxes paid to the governments.

Discuss at least two (2) strategies that multinational corporations (MNCs) can undertake in order to make

FDI allows the home country to invest into the host country to produce, advertise, and distribute products, in order to upsurge their market share and provides a long-term investment and enhancement. (Moosa, 2002)

According to the United Nations a multinational corporation is "an enterprise which owns or controls production or service facilities outside the country in which it is based". .Multinational companies have been largely responsible for uplifting for all spheres of business life across the globe. They are the world leaders in high technology advancement and automation, which resulted in more efficient commerce worldwide. Global expansion has developed a tactical imperative for nearly all large organizations and multinational corporation (MNC) managers have a great deal on their hands in developing, monitoring and changing these strategies. Becoming international is an important factor in assisting organizations in becoming globally competitive.

The internalization theory (Buckley and Casson, 1976) explains that another attributing factor that encourages MNEs to invest abroad is related to avoiding additional transaction costs. This component explains why MNEs prefer to undertake FDI rather than alternatives such as exporting or licensing to gain entry into the market. (Denisia 2010, 108). This can be achieved through vertical integration where the

For multinational businesses to be successful they must continue to grow and make drastic moves to find new markets where there is a need and want for their products. For any business that wants to conduct themselves in a new environment they must understand the cultural norms but must also understand the nuances of local and federal laws that govern the operations of businesses in that country. The same effort must be made to understanding the host countries laws while conducting business in an external nation and international laws and mandates. All these aspects are part of

Multinational companies (MNC) is an international or transnational company headquartered in one country but branches in many developed and developing countries. Examples include General Motors, Coca-Cola, Firestone, Philips, Volkswagen, British Petroleum, Exxon, and ITT. A company will be based on the advantages of multinational companies to establish production and other activities in foreign locations. Companies globalize their activities both to supply the domestic market in their states, and to serve foreign markets directly. Keeping foreign activities within the corporate structure allows the companies to avoid the costs inherent by intermediaries, with a separate entity while utilizing the knowledge of their own

The major contributor to the manufacturing industry is the labour force. The availability of proper labour force adds to the production amount of any organisation. Hence the MNC’s would look forward for the countries with bigger labour force to enhance their production.

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

As the boom of MNCs has been very rapid in the current years, they are proliferating into the developing countries where there is extremely good scope for commercial enterprise. These businesses usually transfer their know-how and business practices like finance and human useful resource (HR) to their subsidiaries in other countries and try and hold coordination.

The theories and study on the multinational corporations (MNCs) internationalisation has been prominent in the international business (IB) studies for many decades. Though earlier studies were dominated by firms’ from the advanced economy in Europe, USA, and Japan. Therefore, is not surprising that theories of MNCs internationalisation or foreign direct investment (FDI) would reflect on the behaviour and perspectives of advanced economies firms. Such theories, for example,

FDI is the outcome of Mutual interest of MNC’s and host countries. The FDI refers to the investment of MNC'’ in host countries in the form of creating productive facilities and having ownership and control. On the other hand if MNC or a foreign organization or a foreign individual buys bonds issued by host country it is not FDI, as it has no attached management or controlling interest. Such investments are called Portfolio Investments.