Why Firms become Multinational Enterprises

Why Firms become Multinational Enterprises Introduction One of the important aspects of globalization is the international transformation of the companies around the world. The companies have evolved from being a domestic firm to a multinational corporation and being present almost everywhere in the world either physically or via internet. These international companies are regarded as true MNCs only if they have made substantial direct investment in foreign countries and have actively and continuously taken part in the management of these assets (Barlett, Ghoshal, p2). Though the companies had started the internationalization process as early as in the seventeenth and the eighteenth century when the developed nations moved towards the under developed ones for acquiring key resources and in search for markets, but the latter part of the twentieth century and the beginning of twenty-first century witnessed a huge expansion in the extent to which the firms go international  (Barlett, ghoshal, p1). The internationalization process has trans formed greatly due to the evolution of the motives and the way firms integrate and expand their businesses around the world. There are both proactive and reactive motivations for a firm to go international. Proactive motivations are evident in firms that see a need for a strategic change and want to go international; whereas reactive firms are those that go international because they have to in order to deal with the competition from the domestic firms growing internationally as well as the foreign players entering the domestic market. (Czinkota, The Export Marketing Imperative, 2004, pg 4). This essay discusses these motives for firms to become MNEs and how they go about it. Why firms become Multinational Enterprises In the increasingly global business environment, many companies cannot afford to be under the assumption that their domestic markets will always be profitable. For this reason, many companies start with selling their existing products to the countries which have more number of consumers (e.g. China and India) or where consumers have more purchasing power (e.g., USA) (Rennie, Michael W, 193). This arises from the primary profit-seeking motive of the companies but also helps them to increase their brand identity and global presence (Czinkota, p4). These companies then customize their product line according to the country in which they are selling in order to expand their customer base and tackle the competition from the domestic players. So increased sales are a major motive for a companys expansion, and in fact, many of the worlds largest companies including Volkswagen (Germany), Ericsson (Sweden), IBM (United States), Michelin (France), Nestle (Switzerland), and Sony (Japan) derive more than half their sales from outside their home countries (UN Conference: Promoting Linkages, 2001). Another motive, which arose from the firms going international, was seeking cost effective resources to propel production for local and foreign markets. As the firms expanded geographically, they needed to attain competitive advantage over other foreign as well as the domestic companies. This drove them to invest abroad in countries where resources needed for production were available at low cost (Cosmin Sabau). In the earlier days, these resources included mainly the natural resources like rubber, steel, aluminum, etc., for example, crude oil was sourced from gulf countries to meet the shortfall in the domestic supply of crude oil. Today, it includes low cost land, labor and capital as well. This helped in lowering their cost of production and offering competitive prices to the customer. Sports good companies like Rawlings rely largely on labor in Costa Rica, a country that hardly plays baseball, to produce baseballs (Philip Hersh, 2009). The motivations to expand internationally however changed gradually in response to the great organizational and technological forces (Barlett, ghoshal, p6). One of the major contemporary motives is achieving economies of scale. It was first noted by manufacturers in the military aircraft industry in the 1920s and 1930s that direct labor costs decreased by a constant percentage as the cumulative number of aircraft produced doubled. By increasing the cumulative output and exporting to a larger market, the companies can bring down their cost of production by 20-30 percent (Ghemawat). Many companies establish foreign research and development (RD) facilities to tap additional scientific resources, sometimes acquiring useful knowledge in the process (Heather Berry, 2006, p 151-168). Avon, for instance, applies know-how from its Latin American marketing experience to help sell to the US Hispanic market (Nery Ynclan, July 23, 2002:EI). Yet another motive for companies going international was shortening PLCs (Barlett, ghoshal, p6). As the life of a product became shorter, adequate returns for all the research and development done for the product could be made only by introducing the product to multiple larger markets. In addition companies nowadays aim to launch the product simultaneously in as many markets as possible to enjoy the maximum returns before more firms start producing substitutes. How firms become Multinational Enterprises Internationalization is a very crucial and strategic decision that a company takes in its lifetime. Certain prerequisites need to be met before a firm can think of nationalizing and becoming an MNC. The first one is high country attractiveness. The country should be able to offer something that will promise a competitive advantage for the company or something that can help the company sustain its existing competitive advantage. Another prerequisite is the ownership of strategic competencies. The company should have some competencies that will help it counter balance the incognizance of foreign markets and environmental conditions. Also, the company should have some organizational capabilities that will increase the ROI by leveraging the companys strategic strengths intensively. These three prerequisites are essential for selecting the mode of internationalization and the mode of country entry that will help the company compete in world business. (Barlett, Ghoshal) There are many methods adopted by companies to internationalize and conquer foreign markets. The earliest method used by firms in their process of becoming MNEs was exports and imports. This may include both merchandise exports and imports and service exports and imports. Service exports and imports may be tourism and transportation, service performance and asset use. Some services earn payment for the companies for the performance of those services. For example, the companies may pay fees for turnkey projects which are transferred to the owner once they are operational. Management contracts also earn the companies fees for the performance of general and specialized management functions for another. Asset use includes Licensing, Franchising, etc. Licensing is the process of allowing another company to use its intangible assets like patents, trademarks, copyrights, or expertise, under contracts known as licensing agreements for which they earn royalties. Example. Franchising is the pr ocess of business in which a company permits another company to use the trademark as an asset of the franchisees business. The franchisor will help the franchisee by supplying raw materials, management services etc. and also will lay down guidelines and standards that are to be followed by the franchisee. For example, McDonalds has franchised its outlets in many countries like UK, India, etc. In many circumstances, a multinational with an exclusive technology may fear that a licensing contract lead to dissipation of its proprietary knowledge. In that case, setting up a foreign subsidiary is a preferable strategy. (http://cep.lse.ac.uk/pubs/download/CP167.pdf) Another method of expanding globally is by making investments on the foreign countries. Foreign investment implies ownership of foreign property in exchange for a financial return. There are two forms of foreign investment: direct and portfolio. The foreign direct investments (FDIs) confer the investor with a controlling stake in the company. For example, when Nintendos CEP bought the Seattle Mariners, the baseball team became a Japanese FDI in the US. Although the control in the foreign company need not be full; even with a minority stake and the remaining ownership widely dispersed, the foreign investor can take decisions that cannot be vetoed by any other owner. When the ownership of the company is taken by more than one company, it is called as a joint venture. Today, at least 61,000 companies worldwide control over 900,000 FDIs in every industry (UN Conference: FDI from Developing and Transition Economies, 2006, p 30-31). On the other hand, the foreign portfolio investment is a non controlling interest in a company or ownership of a loan made to another party. This can be in the form of stocks in a company or loans to a company in the forms of bonds, bills, or notes purchased by the investor. They are comparatively safer than FDIs in terms of risk. Conclusion The changing extent, character and geography of MNE activity over the past two decades is itself a reflection of a series of path-breaking technological, economic and political events. But internationalization is not a one size fits all approach have different motives to go global and do it in the way that best suits their business models and gives them maximum returns. Whichever method a company adopts, it goes through a learning process and increases its knowledge throughout the process. Internationalization has indeed become the need of the hour for companies to sustain their businesses in the long run and develop companys strategic and organizational capabilities.

Communication and Hr

4DEP (HR) Developing Yourself as an Effective Human Resources Practitioner By Susanne Collier 7th November 2011 Activity 1 Today Human Resources (HR) is at the centre of business performance. HR professionals have an important role to play in driving decisions that enable their organisations to thrive in both the short and the longer term. Where in the past the function delivered the fundamentals that underpinned the employee lifecycle (such as recruitment, induction and salary administration) supporting organisation performance is now the theme running through HR’s work. The CIPD have introduced the HR Profession Map which sets out what HR practitioners need to know, do and deliver at all stages in their career. The Map is structured around ten professional areas of HR activity and it focuses on the knowledge, activities and behaviours required in the profession today. The first two professional areas, Strategy, insights and solutions (uses deep understanding of the business – activities, strategies and plans and underlying drivers of and barriers to sustainable performance, and needs of customers and employees – and unique insights to drive business performance through the creation and delivery of HR strategy and solutions) and Leading and managing the HR function (leads and manages a fit for purpose HR function, with a strong track record of operational excellence and a deep understanding of the organisation requirements. Ensures that the function has the right capability, capacity, and organisation design, and that HR employees are fully engaged, work collaboratively and possess a deep understanding of organisation and the drivers that create value). These are central to understanding the organisation and delivering an HR function that delivers success. There are eight behaviours shown on the HR Map that identify in detail how professionals need to carry out their activities and make a contribution to organisational success. Please see Appendix 1 for description of the eight behaviours. The behaviours have been clustered into the following groups: Each professional area and behaviour is described at four bands of professional competence, the bands range from those entering the profession at band one, to those that are leading it, at band four. I currently work as an Office Manager for Miller Heiman Inc at their EMEA headquarters in Milton Keynes. As part of my remit I have to ensure that the delivery of Human Resources (HR) service and information to leaders, managers and staff within the organisation is accurate, efficient, timely and cost-effective and that HR data is managed professionally as I am the first point of contact for all HR-related queries. I have therefore chosen to look at the Service Delivery and Information professional area at Band One, as I believe this is most relevant to my current role. There are eight activities, eleven skills and three behaviours that apply to band one within this professional area, please see Appendix 2. Within my role the behaviours detailed with the respective activity and knowledge are Collaborative, Driven to Deliver, Personally Credible, Curious, Role Model and Courage to Challenge. Collaborative Build appropriate professional, friendly and accessible relationships with employees, line managers, directors and network of suppliers. Driven to Deliver * Assist in the recruitment process – i. e. liaise with recruitment agencies, set up interviews and issue relevant correspondence. * Administer HR-related documentation, such as offer letters, contracts of employment, leavers' and pensions information. * Provide relevant documentation as requested for example employee handbooks, latest policy updates, sickness forms. * Provide data for and prepare management nformation reports, mainly around absence management. * Ensure the relevant HR databases are up to date, accurate and comply with relevant legislation. * Administer Childcare Voucher Scheme, liaising with employees and external providers. Personally Credible * Provide support and advice to employees and line managers, explaining policies and procedures in a timely and effective manner, including maternity, paternity, adoption, parental leave and health ; safety processes and queries regarding benefit and pay issues. * Assist in the development of HR procedures and policies. Take responsibility for own work. * Communicate well both in writing and verbally. * Use own initiative. * Have the ability to work accurately with attention to detail. Curious * Take part in teams meetings, events and training as required. * Have the flexibility and willingness to learn. * Constantly review suppliers for a cost/quality/se rvice comparison. * Good understanding of HR policies and procedures, health ; safety and basic understanding of employment legislation. * Attend Employment Law updates on a regular basis to keep abreast of changes in legislation. Role Model * Be resilient and able to work in an organisation that is undergoing change due to development and growth. * Use tact and diplomacy, being sensitive and respectful to others. * Contribute to the development and implementation of the overall ethos/work/aims of Miller Heiman. * Appreciate and understand the need of confidentiality in dealing with all HR and training issues. * Work in accordance with current policies and procedures. * Appreciate that projects need to be completed, methodical approach with an ability to work under pressure. Courage to Challenge Feedback and look at any changes that are needed in our current practices and implement. * Constantly review personal development plan in line with organisational objectives. Activity 2 HR Customers The HR department has many internal and external customers to serve, including employees, their managers, directors and legal and regulatory agencies. The needs of which may sometimes be in conflict. Below are the main cust omers I have to deal within my role on a daily basis and an example of a few of their needs: Directors| Line Managers| Staff/Peers| Latest Legislations UpdatesManagement Reporting| Appraisal DocumentationPolicy DocumentationHealth ; Safety issues| Payroll QueriesBenefit Entitlement QueriesSickness Forms| A need conflict may arise if for example a director has requested an absence report analysis for a disciplinary meeting be produced for the following day but unexpectedly a line manager has advised you of a potentially serious health and safety issue. Both needs are important to the person requesting them, and I would therefore look at the needs individually to assess their priority and risk to the business if they were not dealt with as a matter of urgency. The absence report could be to assist the director with looking into an individuals time keeping as part of a disciplinary, which is important as this could affect the way forward with the hearing, but the health and safety issue could be a greater risk to the business and/or individual at that precise moment in time so a risk assessment would need to be carried out immediately and then a decision could be made whether action was needed immediately and would therefore then take priority over the absence report. Communication Methods Communication Method| Advantages| Disadvantages| Electronic (Email)| * Quick * Log receipt * Complete * Can send large documentation * Cost advantages| * Eliminate Equal Opportunities due to lack of access * No tone * No relationship * Could be misconstrued | Written (Printed Material)| * Meets legal requirements * Clear audit trail * Provides reference * More in depth detail| * Lack of face to face contact * Unsecure * Slow * Expensive| Verbal(Telephone/Face to Face)| * Checking of understanding * Personal * Immediate| * Trepidation * Language * Lengthy * Lack of control * Cost of calls| Effective communication as explained by Albert Mehrabian in his communication model found that spoken words account for only 7% of what a listener perceives, the remaining 93% of what a listener comprehends originates from the speaker’s body language and tone employed in the delivery of the words. Building and Maintaining Effective Service Building Relationships – It is important to develop a positive attitude, be less judgmental and more accepting of others. Gather Improve Your Communication Skills,  listen carefully and focus on the speaker's message. This will allow you to respond appropriately and avoid misunderstandings. Resolve conflicts early. Treat ALL colleagues with respect and always be courteous and professional. Be open and honest about your feelings and allow others to do the same. Understand and accept personal or cultural differences. Dealing with Difficult Customers and Resolving their Complaints – Listen to the customer and thank them for bringing the problem to your attention. Sincerely convey to the customer your apology for the way the situation has made them feel, but avoiding blame and determine what the customer is seeking as a solution. Once this is established seek to agree on the solution and take quick action to resolve and follow up to ensure the customer is completely satisfied. Meeting time and Budget Constraints – Set goal and deadline expectations at the outset. Prioritise workload and delegate if there is an opportunity too if time is restricted. Research and compare costings to ensure the best value is gained without compromising quality. Must ensure the regular updates are provided. Continuous Improvement – To ensure high levels of customer satisfaction, it is important for HR to continually measure and monitor the needs of its various customers, determine how well it is meeting those needs and identify any areas that represent gaps, this could be done in the form of an annual employee survey, issuing feedback forms for completion or requesting short feedback via email as well as looking at your PDP plan at your annual review and at regular intervals throughout the year. BIBLIOGRAPHY CIPD HR Profession Map http://www. cipd. co. uk/cipd-hr-profession/hr-profession-map/explore-map. aspx (28 Oct 2011) Albert Mehrabian Communication Model http://www. vestedoutsourcing. com/the-psychology-of-outsourcing-part-4-albert-mehrabian-and-comminication/ (31 October 2011) APPENDIX Appendix 18 Behaviours Description Appendix 2Service & Delivery and Information Professional Area Description

Essay on Iago as Expert Manipulator in Shakespeares Othello

Iago as Expert Manipulator in Othello In Othello, by William Shakespeare, the character of Iago cleverly and skillfully alters the appearance of reality within certain characters minds that are clouded by emotion. While Iago does deceive both Cassio and Roderigo, the most vulnerable character to Iagos treachery appears to be Othello. By being a good director and manipulator of emotions and intentions, Iago carries out his plan to exploit Othellos mental weakness almost flawlessly. Iagos ability to bend and sometimes replace the truth with his own lies drives the overall action of the play. The characters most vulnerable to Iagos manipulation seem to be the ones that appear the most emotionally confused. Iago†¦show more content†¦The pestilence turns into the words Iago uses to create the illusion inside Othellos mind that Cassio made love to Desdemona. Iago fulfills this plan in the middle of the next act as he relates an alternate version of the truth to Othello, thus manipulating reality inside Othellos mind. Othello, upon hearing Iagos upsetting words, demands proof of the adultery between Cassio and Desdemona. This demand leads Iago to assume more of a directors role so that he can manipulate the action of the play as well as the minds of the characters. Iagos ability to direct and stage the action of the play demonstrates his ability to alter the appearance of things. An important example of the way in which Iago manipulates the action arises at the moment that he obtains Othellos handkerchief, which had been given to Desdemona. The handkerchief becomes the one object that leads to the destruction of Othello, Desdemona, and Emilia and eventually the downfall of Iago himself. After unknowingly being deceived by Iago, Othello, in a rage of jealousy and anger, demands proof of Desdemonas unfaithfulness. This proof manifests into the handkerchief which Bianca brings to Cassio while Iago directs Othello to hide in a place that he can witness the action take place. In the movie, Othello hides behind cell bars while Iago confronts Cassio. The scene in which Iago reveals to Othello firsthand of Cassios evil deed determines that Iagos ability to stage

Lewis CarrollS Novel “Alice’S Adventures In Wonderland”

Lewis Carroll s novel â€Å"Alice’s Adventures in Wonderland† creates a world that is enforced by extremely foreign and unusual principles and rules that are ordinary to the characters in Wonderland. Alice appears to be odd and unusual compared to the rest of Wonderland’s characters. Her sense of self is tested throughout this novel. When the reader is first introduced to Alice there is not much that we know about her. She is first seen reading a book with her older sister underneath a tree.This scene provides the reader with the knowledge that both Alice and her sister follow the values of a young Victorian girl. One of the values being that education is necessary and important. The reader can elude to this because Alice is a young†¦show more content†¦Alice’s first interaction with this frightened mouse does not go well when she starts to speak about her cat Dinah. The mouse repeatedly asks Alice to stop telling her story for he is frightened an d uncomfortable. 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