0Global Enterprises: These companies have many markets other than their own country market (domestic market) to sell their product. Their products are available nearly all over the world.
Why has globalization increased?
Globalization refers to the integration of markets in the global economy, leading to the increased interconnectedness of national economies. Markets where globalisation is particularly common include financial markets, such as capital markets, money and credit markets, and insurance markets, commodity markets, including markets for oil, coffee, tin, and gold, and product markets, such as markets for motor vehicles and consumer electronics.
Due to:
- transport and communications
- rise of global trade through digital
- capital mobility
Comparisons of Global, MNC, International and transnationals
MNC Organisations:
MNC Advantages and defects:
Emerging role of MNC and its importance in the Indian economy
When global companies enter emerging markets their costs are cheaper than at home, but if these companies want to operate and hire in a more developed market, the costs are much higher. These factors are considering while companies venture out for MNC’s in other parts of the world.
- Chinese companies specifically have clear strengths. they can move fast, be flexible and make quick decisions, they lack knowing culture
- Japan and Korea, has companies successful in selling cars, mobile phones , they think ‘people to people’, not just ‘product to people’
- Prior to 1991 Multinational companies did not play much role in the Indian economy
- Industrial policy 1956 stopped private firms to grow in size beyond a point
- Since 1991 with the advent of industrial policy of liberalization, private foreign capital has been recognized as important for rapid growth of the Indian economy
- In India, the corporate sector spends only few resources on Research and Development (R&D).
- It is the giant multinational corporate firms (MNCs) which spend a lot on the development of new technologies
- Economies are benefited by transferring the new technology developed by MNC countries.
Key poinst to remember here-Factors on whcih MNC has thrived business:
- Promotion of Foreign Investment:
- Technology Transfer
- Promotion of Exports
- Investment in Infrastructure
Reasons for growing importance of Global trade and emergence of Global companies are:
- Large scale business operations: When we talk about international business we talk about the marketing techniques it uses to grow and expand in the international frontier and ladscape. The manufacturing and production occurs on a large diaspora as the business houses sells goods to local market then expands its reach to the global arena. In this manner the surplus goods are exported.
- Combined economies : International business integrates (combines) the economies of many countries. Like a product mobile phone will have finance from one country, assembling units from another country , labour from another country, and logistics distribution services from another country. The design and production and further delivery will involve channels of distribution occuring in various market bases. Finally business sells the product in many countries, i.e. in the international market.
- MNC operations are dominated by developing countries: At present, MNCs from USA, Europe and Japan dominate (fully control) foreign trade. This is because they have large financial and other resources. They also have the best technology and research and development (R & D). They have highly skilled employees and managers because they give very high salaries and other benefits. Therefore, they produce good quality goods and services at low prices. This helps them to capture and dominate the world market.
- Technology sharing happens: International business gives benefits to all participating countries. the receiving country or one who is developing gets the knowledge transfer when international companies are set up in their local market. The develped and rich countries gets utilisationa and minimal cost of labour and hence operative and production cost reduces. The developing and poor countries in this way get more employment opportunities. All this results in economic development of the developing countries.
- Competition thrives all along the way of international business: International business has to face keen (too much) competition in the world market. The competition is between unequal partners i.e. developed and developing countries. Sometimes competition arises from the locala markets too due to political pressures and interferences.
- Importance to Science and Technology: It goes unsaid that International business gives a lot of importance to science and technology. Science and Technology help the business to have large-scale production. Developed countries use high technologies and service goods ina sophisticated manner and also in this manner International business helps them to transfer such top high-end technologies to the developing countries.
- International trade restriction:Restrcitions in trade are bound to happen when a business or a MNC ventures for international marketing. Many governments do not allow international businesses to enter their countries. Political and environmental trade blocks, tariff barriers, foreign exchange restrictions, etc. all this proe a threat to international business
