1. The Multinational Enterprise
By Aziz Ahmed Chaudhry

2. Introduction
A company headquartered in one country but
having operations in one or more other
countries.
Example:
Nestle the chocolate manufacturer is a Swiss
company.

3. Characteristics of Multinational
Enterprises
 Their affiliates must be responsive to a
number of important environmental
forces.
 It draws on a common pool of resources,
including assets, patents, trademarks,
information and human resources.
 It links together the affiliates and business
partners with a common strategic vision.

4. The internationalization process
 It is a process by which a company enters
a foreign market.

5. Major types of foreign entry
 Exporting and uses a local agent or
distributor
 Export through own sales representative
or sales subsidiary
 Local packaging and/or assembly
 Foreign direct investment

6. Why firms become multinational
enterprises?
 A desire to protect themselves from the
risks and uncertainties of the domestic
business cycle
 A growing world market for their goods or
services
 A response to increased foreign
competition

7. Why firms become multinational
enterprises?
 A desire to internalize in order to reduce
costs
 A desire to overcome tariffs barriers
 And the chance to take advantage of
technological expertise by manufacturing
goods directly rather than allowing others
to do it under a license agreement

8. The strategic philosophy of
multinational enterprises
 It is different from that of home country
businesses.
 MNEs do not see their company as an
extension of its domestic roots.
 They hire, fire, and transfer personnel to
meet global needs
 They also combine their talents with those
of other MNEs in creating, financing and
managing joint ventures.

9. The strategic management process
 Identification of the firm’s basic mission
 External and internal environmental
analysis
 Formulation of objectives and overall
plans
 Implementation of these plans
 Evaluation and control of operations