• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month
Page
  1. 1
    1
  2. 2
    2
  3. 3
    3
  4. 4
    4
  5. 5
    5
  6. 6
    6
  7. 7
    7
  8. 8
    8
  9. 9
    9
  10. 10
    10
  11. 11
    11
  12. 12
    12

To what extent and in what ways are the strategies of multinational companies influenced by the country of origin?

Extracts from this document...

Introduction

To what extent and in what ways are the strategies of multinational companies influenced by the country of origin? Kavi Choitram, 0109072. 10-11-03 International Business Tony Edwards Words: 2489 A multinational/ transnational company, according to Peter Dicken, is "...a firm which has the power to co-ordinate and control operations in more than one country, even if it does not own them". (Peter Dicken, Global Shift) Most of these companies are essentially capitalist organisations. As such they behave on the basic principles and rules of capitalism; the quest for profit. With academics such as, acclaimed economist and Nobel Prize winner, Milton Friedman and Adam Smith philosophising in their favour, why would they act in any other way. Although, profit, as Friedman argues, is the only responsibility that a company has, there are other driving factors for an enterprise wanting to multinationalise; growth, increase market share, or sheer dominance. Acknowledging that there are other factors, one can deem that it is the notion of competition that has spurred on these, now multinational, companies. It is these corporations that have spawned this sound-bite of "Globalization". While globalization is thought of by many as having the potential to make societies richer through trade and to bring knowledge and information to people around the world, there are many others who perceive globalization as contributing to the exploitation of the poor by the rich, and as a threat to traditional cultures as the process of modernization changes societies. ...read more.

Middle

There are three main levels at which advantages can be identified down the 'value chain'. 1. The 'downstream level', considers the relationship between the firm and its customers where ability to win price wars, superiority of products, reputation and supplier service provision are examples of advantages possessed by the firm. 2. The 'intermediate' level focuses on the increased levels of a firm, including its skills, attributes, assets and internal and external relationships. 3. The 'upstream' level reflects on dynamic advantages such as being a learning organisation, innovation and the ability to take a long-term view. Therefore, industries involving rapid technological progress will have multinationals with dynamic advantages whereas; stable business environments will focus on downstream advantages. (Yao-Su Hu, The International Transferability of the Firm's Advantages). Further to this, enterprises that succeed at a local level, often feel they can use the same strategy at a global level. Unfortunately, this is not the case, as seen from the example below; HSBC (Hong Kong Shanghai Banking Corporation). HSBC is very much a leading bank in Asia. Although it came up against severe losses when trying to expand west, HSBC managed to acquire Midland Bank. Only 31 percent of its assets are based in Hong Kong, yet, 45 percent of its pre-tax profits originate in Hong Kong, too. This illustrates that HSBC's operations are still more successful in Hong Kong. It does lean weight to the level to which strategy is based from the origin. ...read more.

Conclusion

Knowledge will be passed on by free moving managers. Characterised by five dimensions, this framework of networks is to increase the competitive advantage in any way possible. Creating a new breed of learning organisation seems to be the aim. A firm's strategy is firmly embedded in its particular economic and social context, also known as its 'Administrative Heritage'. These are the 'existing organisational capabilities as shaped by various historical and structural factors'. It preserves the role of the founders in the history of the firm. The further along the spectrum of development we go, we find that the level of influence from the origin declines. Referring back to Perlmutter, we can see that when a geocentric multinational is created, there is a loss of influence from the multinational's origin. Is there a convergence to a single global strategy, as Bartlett and Ghoshal argue? To argue in favour of this would be naive. There is a host of complicating factors that will never subside; political, cultural and social. What we find instead is a mixture of the home practice with that of the host nation. Pauly and Reich are probably correct in observing that although multinationals originate from different home bases they "appear to adapt themselves at the margins but not too much at the core". The strategy will always be effected the enterprises place of origin, the extent in the only variable factor. Depending on the stage of the company, it will either be completely autonomous or on a falling level of autocracy. ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level UK, European & Global Economics section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level UK, European & Global Economics essays

  1. Marked by a teacher

    International Business Strategy - Case Study on Unilever

    4 star(s)

    resulting in a globalized economy is expected after the World War II. Unilever operates in almost all countries across the world and managed to penetrate new markets successfully. From Africa, Asia, Europe, North and South America and the Middle East, most Unilever products are known.

  2. Free essay

    Adam Smith "invisible hands"

    The downward pressure will exists on price (e.g. competition between entrepreneurs) which leads to decrease in price, higher quantity demanded and lower quantity supplied until it reaches new equilibrium E1. Thus, increase in supply steers to lower equilibrium price and higher quantity supplied. Surplus incentivises people to sell and buy (Figure 7).

  1. "Legal control of multinational corporations: problems and prospects".

    legal rules, limited in scope and slow to evolve, with which it must deal8. Economic power is challenging political power - and winning. Nevertheless, according to Human Rights commentator Sir Geoffery Chandler, it is not too late for a balance to be struck: "The myth that companies are more powerful

  2. To what extent has globalisation created a 'borderless world'?

    CONCLUSION We have seen that poor countries that are able to increase their participation in the global economy have higher growth rates, faster poverty reduction, and more rapid increases in education. It is vital that poor countries are able to integrate into the world economy in ways that reduce, not increase, inequality and poverty.

  1. Essay on Adam Smith

    out to benefit themselves the free hand of the free market economy with little regulation shall determine price, quantity, distribution, income etc. Although Smith was not very keen on the capitalist idealism of no regulation at all and although he was not a contemporary capitalist (somebody who invested in capital)

  2. This article review is done for the course of Trends in Global Marketing Strategies. ...

    He sees government as a distorting factor in a competition in that kind of cases. According to Porter, domestic rivalry, like any rivalry, creates pressure on companies to innovate and improve. Local competitors push each other to lower costs, improve quality and service, and create new products and processes.

  1. Where does the World Trade Organisation fit in the overall scheme of international public ...

    The proliferation of RTAs is a fact of life. However, it is vital to accelerate non-discriminatory liberalisation on the multilateral track, as well as strengthen WTO rules and procedures to monitor and discipline RTAs. If that does not occur, RTAs will have increasingly harmful effects, particularly for developing countries. d)

  2. Why do firms exist and should they have a social conscience?

    The top bid was from the Dutch conglomerate Unilever. But Ben Cohen and Jerry Greenfield didn?t want to sell to Unilever. They had built the company with the mission of serving what has come to be known as the ?triple bottom line? ? profits, people and planet. The company offered voter registration along with its ice cream, paid employees

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work