Multinational Corporation Defined
A multinational corporation is an organization headquartered in one nation that that has operations in one or several foreign nations to leverage additional market penetration (Luthans & Doh, 2012). By entering into the global market organizations essentially enter into the threshold of a multinational corporation (MNC). This paper will provide an explanation of globalization, the primary challenges of multinational management, and discuss two separate case studies and their challenges and successes.
Global expansion has developed a tactical imperative for nearly all large organizations and 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. Globalization has become a prevalent spectacle over the past two decades. This is the case and it is not a surprise at this day and age to discover world brands in distant locations throughout of the globe. As indicated by Booton (2011), “Peoria, Ill.-based Caterpillar plans to export partially assembled mini excavator base units to a facility in Europe for final assembly, which it says will improve delivery times to its customers across the pond” (para. 5). Caterpillar has made this decision to support mining across the globe and to support mining in remote locations in China.
As described by Czinkota and Ronkainen (2010), “globalization reflects a business orientation based on the belief that the world is becoming more homogeneous and that distinctions between national markets are not only fading but, for some products, will eventually disappear” (p. 184). In some cases this requires a domestic organization to develop into a global market to survive. By entering into the global market they essentially enter into the threshold of a MNC. According to the United Nations Conference on Trade and Development (UNCTAD), there are greater than 50,000 organizations across the globe that meet the requirements as MNCs (as cited in Aguilera & Flores, 2007).
As many have argued, there are some negative impacts from not encompassing globalization and being solely regional. In a regionalized system, monopolies can develop along with economies that can essentially deteriorate (Sim, n.d.). Being global opens up more opportunities for an organization. They also become more open to economic growth as the world is frequently changing and new opportunities arise. Economic growth is equally important to both rich and poor nations as economic growth creates a nation’s monetary strength and security (Reddy & Vyas, 2004).
Development of globalization
International trade and direct investments have become progressively significant in the world’s economy (Griffin & Pustay, 2010). There are several elements that have contributed to the development of globalization. ...