39
INTERNATIONAL BUSINESS
GROUP MEMBERS
Ahmad Hassan Anam NaveedMavra SiddiqArslan Aslam
HOW LOCAL COMPANY KEEPS MNC’S AT BAY?
MULTINATIONAL CORPORATIN
HISTORY
Multinational is the form of trading companies started in the 17th or 18th centuries. The Hudson bay company, East India company & French Leant company were the major transitional companies established those days.
In the early 20th century British petroleum, standard oil Ana coda copper and international Nickel were the major MNCs investing mainly in mining petroleum industries.
The 1st multinational business organization was the Knights Templar founded in 1120.
MULTINATIONAL CORPORATION
DEFINITION
According to ILO(international labor organization) MNC’s is any corporation that has its management head quarters in one country i.e Home country and operates in another countries i.e host country.
How local companies keeps MNC at bay?
1) Customized products or services.
2) Develop business models to overcome key obstacles.
3) Latest technologies.
4) Low cost labor.
5) Scale up quickly.
Customized product and services: Local companies know people’s
preferences, income level, age .They understand the market in which
they operate .Offer large variety of products and
servicesDeep understanding of the consumers in
their countries.
GOODBABY GROUP OF CHINA
Develop business model to overcome key obstacles
Identifying the key challenges like lack of distribution channel and infrastructure.
Example:SHANDA Games (china) VS Microsoft.
SHANDA GAMES VS MICROSOFT
SHAND GAMES (China) MICROSOFT
Latest technologiesNew technologies keep operating costs
low and enable companies to deliver good-quality products and services.
Example:
Brazil’s GOL purchase the new and big plane.
Bigger planes increase the capacity per flight.
New technology reduce the cost per seat.
Low cost Labor
Local companies are using local cost traditional labor and in housing training instead of relying on technology from abroad.
Example: Apollo hospital in India has invested in
its own training facilities.
APOLLO HOSPITAL IN INDIA
SCALE UP QUICKLY
Go national as soon as possibleScaling up quickly.
Example:
GOODBABY group of china
GOODBABY
35 companies in different china
cities
300 distributors
Marketing and sales network
1,600 stores
WHY FIRMS BECOME MULTINATIONAL COMPANIES
Reasons:1. Diversify themselves against risk
2. Growing world market for goods and services
3. To increase the foreign competition and a desire to protect their home market by using competitors market by using “competitors strategy”
This approach serves dual purpose
Takeaway business from their competition by offering customers other choices.
Competitors knows if they attack MNEs home market, the response will be similar.
Reduce cost Eliminate transportation cost
avoid overhead associated with middlemen, respond more rapidly and accurately to customers needs and take advantage of local resources.
This process is known as internationalization of control with in the MNEs
Overcome protective devices such as tariffs and non tariff barriers.
NAFTA for example, eliminating tariffs between Canada, Mexico, and US.
Take advantage of technological expertise by manufacturing goods, directly by FDI ,
Nature of Multinational Enterprises:In US over 60000 MNEs ; but only 500
largest accounts for 80% of all Foreign Direct Investment (FDI).
Majority owned by trait 430 companies .Total annual sales of these 500 firms in
excess of $12.5 trillion collectively employee 43 million people
WIDE VARIETY OF OPERATIONS Autos , computers, chemicals, consumer
goods ,financial services, industrial equipment, oil and steel production.
Large MNEs have a significant impact on international business and the world economy.
CHARACTERISTICS OF MULTINATIONAL COMPANY’s:Tow Major Areas Concern Home country of its headquarters Host countries which it does
businessCHARACTERISTICS
Affiliates responsive to a number of important environmental forces, including
competitors customers supplies financial institutes and government
Common Pool Resources including, Assets Patents Trademarks Information and Human resources.
Link together the affiliates and business partners with common strategic vision
