Multinational Firms
• Organizations that conduct business operations across national
borders are called international firms or multinational corporations.
The strategic-management process is conceptually the same for
multinational firms as for purely domestic firms; however, the
process is more complex for international firms as a result of more
variables and relationships.
• The social, cultural, demographic, environmental, political,
governmental, legal, technological, and competitive opportunities
and threats that face a multinational corporation are almost
limitless, and the number and complexity of these factors increase
dramatically with the number of products produced and the number
of geographic areas served
•
Millions of small businesses do business everyday outside their home
country by interacting with customers though websites, smartphones, and
social media. All of Africa, and places such as Cuba and Iran, are becoming
more desirable for business
every day.
• More time and effort are required to identify and evaluate external trends
and events in multinational corporations than in domestic corporations.
Geographic distance, cultural and national
differences, and variations in business practices often make communication
between domestic
headquarters and overseas operations difficult.
• Strategy implementation can be more difficult because different
cultures have different norms, values, and work ethics.
• Multinational corporations (MNCs) face unique and diverse risks,
such as expropriation of assets, currency losses through
exchange rate fluctuations, unfavorable foreign court
interpretations of contracts and agreements, social/political
disturbances, import/export restrictions, tariffs, and trade
barriers.
• Strategists in MNCs are often confronted with the need to be
globally competitive and nationally
• Before entering international markets, firms should scan relevant
journals and patent reports, seek the advice of academic and
research organizations, participate in international trade fairs,
form partnerships, and conduct extensive research to broaden
their contacts and diminish the risk of doing business in new
markets.
• Firms can also offset some risks of doing business internationally
by obtaining insurance from the U.S. government’s Overseas
Private Investment Corporation (OPIC). The decision to expand
operations into foreign markets—that is, to globalize—is one of
the most important strategic decisions made by companies.
Different Languages Globally
• strategic issue facing many firms is whether to publish their website
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material in different languages, given that most of the world’s
population does not speak English.
Pioneering work to document the number of different languages
spoken has been done by the Summer Institute
of Linguistics (SIL) International.
That organization today publishes 2,508 translations of the Christian
Bible, and has compiled a catalogue of the world’s languages, called
the Ethnologue, which lists 6,909 distinct languages being spoken.
Of that total, only 230 are spoken in Europe and 2,197 in Asia. But in
Papua, New Guinea, 830 different languages are spoken by 3.9 million
people, and in France, the Ethnologue cites 10 languages being
spoken, including Picard, Gascon,
Provençal, Allemannisch, Alsace, Breton, and French.
Academic Research Capsule 2-1 reveals that most languages will
permanently disappear by the end of this century
Labor Unions across Europe
• Prevalence of unions is a relevant factor in many strategic decisions, such as
where to locate stores or factories. There is great variation across Europe in
regards to levels of union membership, ranging from 74 percent of
employees in Finland and 71 percent in Sweden to 9 percent in Lithuania
and 8 percent in France.
•
However, percentage of union membership is not the only indicator of
strength. In France, for example, unions have repeatedly shown that despite
low levels of membership, they are able to mobilize workers in mass strikes
and demonstrations to
great effect.
• The average level of union membership across the whole of the European
Union (EU), weighted by the numbers employed in the different member
states, is 23 percent, compared to about 11 percent in the United States. The
European average is held down by relatively low levels of membership in
some of the larger EU states: Germany with 18 percent, France with
8 percent, Spain with 19 percent, and Poland with 12 percent. The three
smallest states—Cyprus, Luxembourg, and Malta—have levels well above
the average.
• The four Nordic countries of Denmark, Sweden, Finland, and Norway have
67, 70, 74, and 52 percent, respectively, of all employees as members of
unions.
• In part this is because, as in Belgium, which also has above-average levels of
union density, unemployment and other social benefits are normally paid
out through the union.
• High union density in the Nordic countries also reflects an approach that
sees union membership as a natural part of employment. Central and
Eastern Europe nations generally have below-average levels of union
membership. In Poland, for example, 12 percent of employees are
estimated to be union members.
• Level of union membership is clearly trending downward all over Europe.
The two exceptions appear to be Ireland and Italy, where union membership
is slowly growing
Thanks