Which theories best explain why the MNC conducts international business? Given the specific countries where the MNC does its business, describe the agency problems and constraints that the MNC experiences in seeking to achieve their objectives, and how they attempt to overcome them. Theories that answer why PepsiCo conducts international business: Theory of Comparative Advantage Certain countries specialize in the production of certain goods and services. Also, labour or materials in the home country of the MNC may be more expensive than if they were to operate in another country to produce the same good or service. Specialization by countries can therefore increase efficiency in both how quickly a product is produced and the use of capital.
Globalization is the development of international influence in an organization. Reciprocity and globalization are important factors for purpose of trade. Nonetheless, if concepts much like these two are misunderstood or misused in our economy, it could lead to a negative impact. For example, In “Mr. Trump’s Trade War” written by Douglas
It is depends on the existing firms and the “height” of barriers to entry that attributes of an industry’s structure. The threat of new entrants will affect by: Firstly, the economics of scale as “high” barriers to entry into the industry that can make the industry more attractive because of the existing firms can earn expect above normal profits. Secondly, the product differentiations that the existing firms have their own brand identification and customer loyalty that will lead to new entrants use more costs to start other industry and then reduce their potential return. Thirdly, cost advantages independent of scale mean that the existing firms have a whole range of cost advantages. There are proprietary technology, managerial know-how, favorable access to raw materials, and learning-curve cost advantages.
And it is complex to make the Planet Preserve product the bestselling product in international market. The Planet Preserve business needs more experience and skills, knowledge to become mature enough to come in international market. First Planet Preserve business should target to earn profits and money from domestic market because when you export the product in international company, the product will become more expansive for the customers in new country due to sales tax and other commissions.
This process is also perceived as the activity that incentives companies, countries, people and knowledge to detach themselves from a local and nationalistic perspectives and to get close to a broader outlook, in which world is interconnected and interdependent (Business Dictionary). A fundamental requirement of the globalisation is the free transfer of capital, goods and services across national boundaries. It is possible to analyse globalisation also from a sectorial point of view, in fact, higher will be the sector 's globalisation level, higher will the advantage coming from the economies of scale and scope. It is interesting defined economy also from a company 's point of view. Indeed, when a company decide to approach itself to the globalisation, it has to plan an expansion of itself, including products, services and investments, in the foreign countries (Baronchelli, 2008).
Local manufacturers must become more competitive or may run out of business with less limited trade. Capital investment:Trading blocks could also attract capital investment if non-member countries decide to establish subsidiary operations inside blocks in order to avoid the payment of inport tariffs. It should be clear that the primary motivation for the establishment of a trading block is the expansion of market opportunities which in return leads to economies of scale in production, greater volumes of competatively priced goods sold, and higher profits for members of the
Global strategy Introduction Companies are building a diversified customer base by taking advantage of the fact that many barriers to global trade have eased up and a trend of globalisation is in full force. Moreover, maturity in domestic markets is also driving companies to pursuing international markets to gain a competitive advantage and increase in capacity. However, internationalisation usually presents the struggle of how to establish the company’s business and brand in a foreign market. This is brought by since the culture, environment and experiences are usually different in global markets compared to domestic. As companies begin to market its products in a foreign country, one important strategic decision it has to make is whether
Unremarkably cited as "synergies." o Augmented market power (over suppliers and downstream channel members) o Reduction within the price of international trade by operational factories in foreign markets. Sometimes advantages will be gained through client perceptions of linkages between merchandise. For instance, in some cases natural action will be achieved by mistreatment identical name to market multiple merchandises. However, such extensions will have drawbacks, as seen by Al Ries and Jack Trout in their promoting classic, Positioning.
Globalization is right for sure countries, along with the ones within the evolved world or global North where wealthy countries just like the U.S., united kingdom, and Germany can sell extra products and items to new markets inside the global South or poorer nations which include the Philippines and Indonesia. Globalization plays a vital function in presenting no longer only products and services but also method of living and the manner of boom and improvement. the following are some of the monetary benefits of globalization in connection to overseas groups: • Reduces worldwide poverty via imparting work to people. • Contributes to the spread of era by way of introducing new techniques of development. • Provides to the profitability of companies and agencies via earnings and global income.
Glocal means a case in which a global product is altered in some manner in order to meet the needs of or appeal to local consumers. Glocalisation seeks to involve and thus acknowledge and local preferences and culture in products. As explained by Phillip Hong and In Han Song, glocalization corresponds to the integration of local markets into world capitalism. Although this concept is not yet a part of the dominant mentality in product design, this research shows there are examples of such a tendency among global companies. ]