| An expatriate, on international business | | | | One of the most important motivations for |
| travel most of the times, arrives on the | | | | companies to expand their operation |
| British Air Way's flight, rents a Toyota at | | | | internationally is the low-cost factors of |
| Hertz, drives down-town to Hilton hotels and | | | | production in developing countries like China |
| reaches the room, flips on to Sony TV and | | | | and India (Papers4you.com, 2006). This has |
| catches the glimpse of the same flashing | | | | had a tremendous influence on the economies |
| signs of 'Coca-Cola' and 'BMW' etc. Then | | | | of the developing countries, acting as a |
| suddenly while watching the news on BBC a | | | | catalyst in their growth process. However, |
| sense of disorientation sets in and they try | | | | entering a new market in a different nation |
| to remember where they are Sydney, Singapore, | | | | is not as easy as it sounds, with factors |
| Stockholm or Seattle? This has become a | | | | like local culture and local market knowledge |
| common experience, thanks to the MNC | | | | presenting as obstacle initially. There are |
| phenomenon. Multinational Corporations (MNC) | | | | various ways in which a company can decide to |
| account for 40% of the worlds manufacturing | | | | enter the market, one such model being the |
| output and almost a quarter of the world | | | | Uppsala model, which suggests a company |
| trade. About 85% of the world's automobiles, | | | | should make an initial commitment of |
| 70% of computer, 35% of toothpaste and 65% of | | | | resources to the foreign market through which |
| soft drinks are produced and marketed by MNCs | | | | it gains the local market know-how on the |
| (Bartlett et al, 2003, p3). | | | | basis of which further evaluations can be |
| | | | made (Bartlett et al, 2003). However, there |
| However, most of the MNCs have come up in | | | | are many companies who do not follow such |
| recent times of change and globalisation. It | | | | models and take a short cut to building the |
| is evident in the changed definition of MNC | | | | market knowledge by investing in or acquiring |
| i.e. till 1973 the United Nations defined MNC | | | | a local partner for instance Wal-Mart entered |
| as an enterprise which controls assets, | | | | the UK by buying the supermarket chain Asda |
| factories, mines, sales offices and the like | | | | (Papers4you.com, 2006). |
| in two or more countries (Bartlett et al, | | | | |
| 2003). However, the scope of what the term | | | | However, in recent times most companies have |
| Multinational Corporation covers has changed | | | | recognised the need to be responsive to local |
| and required two crucial qualifications | | | | markets and political needs and the |
| vis-Ã -vis first qualification requires an | | | | management styles followed by multinationals |
| MNC to have substantial direct investment in | | | | are gradually shifting towards a |
| foreign counties and not just an export | | | | trans-national strategy of 'Think global, act |
| business. While the second requisite for a | | | | local'. |
| true MNC would be a company engaged in the | | | | |
| active management of these offshore assets | | | | References |
| rather than simply holding them in a passive | | | | |
| financial portfolio (Bartlett et al, 2003). | | | | Bartlett, C. et al. (2003). 'Transnational |
| | | | Management'. 4th Ed. McGraw-Hill, London. |