A Brief Note On Multinational Enterprises

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INTERNATIONAL BUSINESS

ASSIGNMENT

Contents

Item Page

Introduction

What is a Multinational Enterprise?

What is a Small to Medium Enterprise?

Current Dynamics Foreign Direct Investment The Triad Licensing Franchising Product Life Cycle Coasion Approach Eclectic Paradigm Meishi

Conclusion

References

Tables

Table 1 – Growth table
Table 2 – Top 10 MNE’s
Table 3 – Impact of MNE’s on host nations

Introduction

International Business is the study of transactions taking place worldwide to satisfy the needs of individuals and organisations.
Two of the most common types of business activity are: Import/Export and Foreign Direct Investment.
Both of which have been on the rise in recent years as a result of Multinational Enterprises (MNE’s).
The following assignment will look at the developing relationship between MNE’s and Small to Medium Enterprises (SME’s), how the current dynamics have evolved and how they may evolve in the future.

Multinational Enterprises
A Multinational Enterprise (also known as Transnational) is a company that has headquarters in one country, yet operates in other countries.
In order to be recognised worldwide by consumers, Multinational Enterprises (MNE’s) obtain growth by:

Table 1 – Growth Table
| | |
|Type of Growth |Definition |
| |A relationship between two or more companies that work |
|Strategic Alliances |together to achieve a collective advantage. |
| |A commercial enterprise that is carried out jointly by two or |
|Joint Venture |more companies that otherwise retains their distinct identity,|
| |and agrees to share profits. |
| |The combining of two or more companies, generally by offering |
|Merger |the stockholders of one company securities in the acquiring |
| |company in exchange for the surrender of their stock. |
| |Where a company purchases most, if not all of the target |
|Acquisitions |companies ownership stakes in order to take control of the |
| |target firm. |

The three types of MNE are as follows: • Multi-domestic Corporation – A company that operates internationally who allows operations in one country to be fairly independent to other countries. • Global Corporation – Is a company incorporated throughout the world, enabling them to legally sell products globally. • Transnational Corporation – Is a company that manages establishments in two or more countries.

“The United Nations identified over 60,000 MNE’s, however the largest 500 account for 80% of worlds Foreign Direct Investment” (Rugman & Collins, 2009, p.40)

Table 2 – Top 10 MNE’s

|Rank |Company |Revenues |Profits |
| | |($ millions) |($ millions) |
|1 |Wal-Mart Stores |421,849 |16,389 |
|2
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