International Business Mnc Essay

Introduction Multi National Corporation engages in domestic and foreign product development. Sometimes the host country has a product (labor, ingredient, part, etc) that is rare or less costly than producing it in the home country; therefore establishing a Multinational Corporation is a win-win for the host country as far as supply, demand, labor and cost. Many corporations currently engage in Multinational Enterprise and are successful in their efforts. Having businesses that are active in MNC truly creates a global business community where mutual interests and product development are core to the needs of the customer, business and boost foreign economies with jobs, businesses and exporting goods. Country Economic system Political environment Legal environment Technological China Mixed economy Socialism Complex regulations Japan Mixed economy Capitalism Complexity France Mixed economy Capitalist/Socialist Complexity Ethical system Social responsibility indicators Cultural dimension Confucianism Laws & regulations Collectivism Laws & regulations Collectivism Laws & regulations Collectivism Product, Business Plan and Foreign Direct Investment (FDI) Acai berry is native to Central and South America and the plant is a great anti-oxidant that can be used for several purposes. My company, Natural Beauty, has partnered with Acai palm tree companies in Belize to provide the product and have manufacturing warehouses located in Belize. This foreign direct investment offers a win-win situation for all of the companies involved. We have chosen the downstream vertical FDI as a means to partner with Acai palm tree farms and companies in Belize. The home country is the U. S. and although the product is not sold in Belize however it is distributed in other countries such as the United States, Brazil, France, England, China, Japan, and Qatar. There are multiple advantages of an FDI as show in the ownership, location, and internalization (OLI) framework (Peng, 2011). Understanding the framework I understand that ownership allows for possession and leveraging of resources, value and other added components to allow a competitive market. The Location component ensures that we are close to our main ingredient with the product, that we are able to have labor, ingredients and manufacturing at the lowest cost available while providing a boost to the host countries local economy and creating global competition. We are in several countries which provide internalization and we have intellectual property rights over all of our products, processes and business plan. We protect our businesses by knowing our dissemination risks and safeguarding against them as much as possible. Since we know our dissemination risks we are able to safeguard against direct competitors that may branch out from local distributors. We also are aware of market imperfections and do our best through our international legal team to stay abreast of international trade, business and government regulations. We also have safeguards against agglomeration due to the international craze over the Acai berry, plant and trees. We do this through our contract clauses which state other companies cannot be located within a certain distance, city, or space as ours in host countries. Natural Beauty, Inc. understands the intricacies of business and politics, especially within an international structure. We are in no way operating as a monopoly or radical imperialist (Peng, 2011) business. We believe in free market and working with our host country partners to ensure that each of them are maximizing their capacity and invested in the good and services provided by our joint venture. It is important that the FDIs benefits outweigh the costs and it is truly a win-win for all parties involved. Cost and Benefits of FDI As we can only imagine, there are benefits and costs to both the host and the home countries involved in Multinational Corporation. The benefits for Belize are the capital inflow, technology, management and job creation. The other countries of distribution have the same benefits that boost local knowledge, economy and globalization. The costs for the host countries are loss of sovereignty, capital outflow, and competition. The largest benefit is creation of jobs and expanded knowledge. The largest cost is loss of sovereignty. The benefits for the host countries must outweigh the costs and only the local governments and direct companies involved can project overtime which is more beneficial for them. The benefits for the Natural Beauty in the U.S. are earnings, exports, and learning from abroad whereas the costs are capital outflow and job loss. The latter can be quite devastating if the proper precautions and business plans are not in place in addition to being aware of local/international politics. However job loss here means possible savings in salary/wages in other host countries where the earning are not as high which saves the company money. The largest benefits are earnings and learning from abroad. The largest cost is job loss and the political climate around American companies that take their businesses abroad (remember NAFTA). Another threat is that local business can learn your process and then become your largest competitor and they have the â€Å"home field† advantage. This is known as the contagion effect (Peng, 2011). We recognize that FDIs can be complex and must be mutually beneficial for all parties involved and therefore we make a conscientious effort to recognize the need for location advantages, licensing and outsourcing knowledge/expertise and understanding of constraints (political and business in order to be successful). Future of MNC The future of Multinational Enterprise is contingent upon true understanding of global communities and global business. Understanding that free market, consciousness and international trade laws will dictate most of the business efforts and establishments. Many companies are already engaging in MNC successfully (BMW, Coca Cola, etc) and those interested in exploring this option should create several case studies looking at the successful and not so successful efforts in this realm to learn from them. I think that host MNC countries participating in FDI should be careful not to lose their power and prestige in the name of partnering for monetary gain. It is easy for smaller less powerful countries to get lost in the MNC FDI advantage for the sake of job creation and boosting local economy; however not at the cost of their culture, citizens and green space (for those working with rainforest communities or those with precious agriculture). The future of MNC can be bright when all partie s involved are up front and conscious about maintaining and win-win business. References Peng, M., (2011). Global. 1st Edition; Mason, OH, Cengage Learning www.alibaba.com/†¦/CN/technological-environment.html Luthans, F., & Doh, J. P. (2012). International management: Culture, strategy, and behavior (8th ed.). Boston, MA: McGraw-Hill.