ISSUES AND CHALLENGES
 An
MNC is a corporation headquartered
in one country and having operations in
more than one country
 EMC = Emerging markets MNC = MNCs
headquartered in an emerging market
and having operations in more than one
country, i.e. Malaysian MNCs
 Three
types of headquarters
attitude/orientation towards subsidiaries
in an MNC:
• Ethnocentric
• Polycentric
• Geocentric
Organization
design
Ethnocentric
Polycentric
Geocentric
Complexity of
organization
Complex in
home country,
simple in
subsidiaries
Varied and
independent
Increasingly
complex and
interdependent
Authority;
decision making
High in
headquarters
Relatively low in
headquarters
Aim for
collaborative
approach
between
headquarters and
subsidiaries
Evaluation and
control
Home standards
applied for
persons and
performance
Determined
locally
Find standards
which are
universal and
local
Organization
design
Ethnocentric
Polycentric
Geocentric
Rewards and
punishments
High in
headquarters, low
in subsidiaries
Wide variation, can
be high or low
rewards for
subsidiary
performance
International and
local executives
rewarded for
reaching local and
worldwide
objectives
Communication;
information flow
High volumes to
subsidiaries,
orders, command,
advice
Little to and from
headquarters; little
between
subsidiaries
Both ways and
between
subsidiaries; head
of subsidiaries part
of management
team
Recruiting; staffing
development
Recruit and
develop people of
home country for
key positions
everywhere in the
world
Develop people of
local nationality for
key positions in
their own country
Develop best men
everywhere in the
world for key
positions
everywhere in the
world
Environmental
Intra-organizational
Economic nationalism in host and
home countries
Management inexperience in
overseas markets
Political nationalism in host and
home countries
Nation-centered reward and
punishment structure
Military secrecy associated with
research in home country
Mutual distrust between homecountry people and foreign
executives
Distrust of big MNC by host-country
political leaders
Resistance to letting foreigners into
the power structure
Lack of international monetary
system
Anticipated costs and risks of
geocentrism
Growing differences between the
rich and poor countries
Increasing immobility of staff
Home-country political leaders’
attempts to control firm’s policy
Linguistic problems and different
cultural background
 Dwindling
global supply of resources
 Rising inflation
 Stag-deflation (combination of
stagnation/recession/depression)
 Great depression?
 Rising unemployment rate
 People-government expectations
 Political tension
 End.
 Discussion
 Thank
you.