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The multinational enterprise
A multinational enterprise (MNE) is a company headquartered in one country that has operations in one or more other countries. MNEs draw on common resources and link together affiliates with a shared strategic vision to respond to environmental forces in multiple countries. Firms become MNEs to protect themselves from domestic economic risks, access growing foreign markets, respond to competition, reduce costs through internalization, overcome tariffs, and take advantage of technological expertise. MNEs see themselves as global rather than an extension of their home country and manage personnel to meet worldwide needs through strategic processes like joint ventures.
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Introduction to multinational enterprises, with Nestle as an example of a Swiss company.
MNEs are responsive to environmental forces, share resources, and have a common strategic vision.
Describes the process through which a company enters foreign markets.
Major types of foreign entry include exporting, local agents, packaging, assembly, and direct investment.
Reasons firms become MNEs include risk protection, market growth, competition response, cost reduction, and overcoming tariffs.
MNEs operate with a global perspective, not just as extensions of domestic businesses, focusing on global needs.
The strategic management process includes mission identification, environmental analysis, objective formulation, and evaluation.
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The multinational enterprise
- 1. The Multinational Enterprise By Aziz Ahmed Chaudhry
- 2. Introduction A company headquarteredin one country but having operations in one or more other countries. Example: Nestle the chocolate manufacturer is a Swiss company.
- 3. Characteristics of Multinational Enterprises ď‚—Their affiliates must be responsive to a number of important environmental forces. ď‚— It draws on a common pool of resources, including assets, patents, trademarks, information and human resources. ď‚— It links together the affiliates and business partners with a common strategic vision.
- 4. The internationalization process ď‚— It is a process by which a company enters a foreign market.
- 5. Major types offoreign entry ď‚— Exporting and uses a local agent or distributor ď‚— Export through own sales representative or sales subsidiary ď‚— Local packaging and/or assembly ď‚— Foreign direct investment
- 6. Why firms becomemultinational enterprises? ď‚— A desire to protect themselves from the risks and uncertainties of the domestic business cycle ď‚— A growing world market for their goods or services ď‚— A response to increased foreign competition
- 7. Why firms becomemultinational enterprises? ď‚— A desire to internalize in order to reduce costs ď‚— A desire to overcome tariffs barriers ď‚— And the chance to take advantage of technological expertise by manufacturing goods directly rather than allowing others to do it under a license agreement
- 8. The strategic philosophyof multinational enterprises ď‚— It is different from that of home country businesses. ď‚— MNEs do not see their company as an extension of its domestic roots. ď‚— They hire, fire, and transfer personnel to meet global needs ď‚— They also combine their talents with those of other MNEs in creating, financing and managing joint ventures.
- 9. The strategic managementprocess  Identification of the firm’s basic mission  External and internal environmental analysis  Formulation of objectives and overall plans  Implementation of these plans  Evaluation and control of operations