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    UNIT-5 Strategic Management

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    Radha Raman Pandey
    The document discusses multinational corporations (MNCs), which manage production or services across multiple countries. It outlines the advantages and disadvantages of MNCs, including gaining new customers but also facing different political and cultural environments. The document also examines global challenges for businesses, differences in communication styles between countries, the impact of worldwide tax rates on business location decisions, and the roles of international institutions.

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    UNIT-5 Strategic Management

    Uploaded by

    Radha Raman Pandey
    68 views14 pages
    The document discusses multinational corporations (MNCs), which manage production or services across multiple countries. It outlines the advantages and disadvantages of MNCs, including gaining new customers but also facing different political and cultural environments. The document also examines global challenges for businesses, differences in communication styles between countries, the impact of worldwide tax rates on business location decisions, and the roles of international institutions.

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    global strategic management for international level

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    The document discusses multinational corporations (MNCs), which manage production or services across multiple countries. It outlines the advantages and disadvantages of MNCs, including gaining new customers but also facing different political and cultural environments. The document also examines global challenges for businesses, differences in communication styles between countries, the impact of worldwide tax rates on business location decisions, and the roles of international institutions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    68 views14 pages

    UNIT-5 Strategic Management

    Uploaded by

    Radha Raman Pandey
    The document discusses multinational corporations (MNCs), which manage production or services across multiple countries. It outlines the advantages and disadvantages of MNCs, including gaining new customers but also facing different political and cultural environments. The document also examines global challenges for businesses, differences in communication styles between countries, the impact of worldwide tax rates on business location decisions, and the roles of international institutions.

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    Global Issues in Strategic Management

    The world is just for travelers

    What is an MNC?

    Multinational corporation (MNC) is a enterprise that manages production or delivers services in more than one country.

    Multinational corporate structure


    Horizontally integrated multinational corporations manage production establishments located in different countries to produce the same or similar products. (example: Ford, General Motors, Coca-cola and McDonalds Vertically integrated multinational corporations manage production establishment in certain country/countries to produce products that serve as input to its production establishments in other country/countries. (example: Adidas, Royal Dutch Shell, BP , Chevron Corporation, Texas Fuel Company.

    Advantages of MNCs
    Gain new customers for their product and services. Growth in revenues and profit. To meet expectations of stakeholders. To meet organization success. Competition may be less intense then domestic market. Result in reduce tariffs, lower taxes and favorable political treatment. Joint ventures enable firm to learn Technology, culture &business. Large scale production and better efficiencies allow higher sales volume and lower price offerings. A firms power and prestige enhance significantly if it competes globally.

    Disadvantages of MNCs
    1.
    2.

    3.
    4. 5.

    Firms confront with different cultures, sometime they cannot understand the rules of game. Firms confront with different political, legal, Demographic , technological, economical environment etc. Dealing with different monetary systems, can generate complication. Communication barrier. Autonomy to local managers .

    Global Challenges
    The global challenges faced by business is two folds: How to gain and maintain exports to other nations, and How to defend domestic markets against imported goods. Few companies can afford to ignore the presence of international competition. Firms that seem insulated and comfortable today may be vulnerable tomorrow.

    Communication differences across country


    Americans increasingly interact with managers in other countries, so it is important to understand foreign business cultures. Americans often come across as intrusive, manipulative and garrulous; this impression may reduce their effectiveness in communication. Forbes recently provided the following cultural hints - Italians, Germans, and French do not soften up Israelis accustomed to fast paced meetings British, American-- chatter too much European treated like childrens India interrupting one another Malasiya or Japanese need time to negotiate

    World wide tax rates and their impact


    The lowest corporate tax rates among developed countries reside in Europe, and European countries are lowering tax rates further to attract investment. The average corporate tax rate among European Unioin Countries is 26 percent, compared with 30 percent in the Asia-Pacific region and 38 percent in the U.S. and Japan. Ireland and the former Soviet-bloc nations of Eastern Europe recently slashed corporate tax rates to nearly zero, attracting substantial investment. Germany cuts its corporate tax rate from 39 % in 2007 to just under 30 % in 2008. Great Britain cut its corporate tax rate to 28 % from 30 %. France cut its rate from 34 % to 27 % in 2008. Note- It effect companies decisions to locate plants and facilities.

    Participation of international institutions


    World Trade Organisation International Monetary Fund World Bank

    MNC In India
    MNC in India are attracted towards: Indias large market potential India presents a remarkable business opportunity by a. Labor competiveness b. FDI attractiveness Indias vast population is increasing its purchasing power India is also emerging as the manufacturing hub.

    The Indian MNCs


    Paints Asian Paints Auto & Components Tata Motors, Bharat Forge

    Chemicals Tata Chemicals, United Phosphorus


    Packaging Essel Pharmaceuticals Ranbaxy, Wockhardt, Sun, DRL Oil & Gas ONGC

    Types of international Business


    Exporting Local products are sold abroad Importing The process of acquiring products abroad and selling them in domestic markets. Licensing one firm pays a fee for rights to make or sell another companys products. Franchising a firm pays a fee for rights to use another companys name and operating methods.

    International Business
    Joint Venture A firm operates in a foreign country through co-ownership with local parties.
    Strategic Alliance each partner hopes to achieve through cooperation things they couldnt do alone. Foreign Subsidiary a local operation completely owned by a foreign firm.

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