midterm #1

Monday, April 27, 2009

Midterm Question #1

MNC's are complex organizations however, they dominate the worldwide market. Knowing the background and nature of MNC's, answer the following:

1. Identify the benefits and disadvantages of MNC's.

ans: the benefits of MNC is to may provide training and education for employees thus creating a higher skilled labour force. These skills may be transferred to other areas of the host country. Often management and entrepreneurial skills learned from MNEs are an important source of human capital

Disadvantages:

• hurt domestic firms by eliminating competition (due to enjoying comparative advantage over local firms)
• worsen the imbalance between rural and urban areas (growing difference between incomes)
• skills of local labour may not improve if it is used to fill only low-skill positions and no training is provided
• political leverage
• environmental costs
• avoid tax by practising transfer pricing

2. Identify one MNC company and describe its operation.

ans: Nike company, . The company initially operated as a distributor for Japanese shoe maker Onitsuka Tiger, making most sales at track meets out of Knight's automobile.Nike produces a wide range of sports equipment. Their first products were track running shoes. They currently also make shoes, jerseys, shorts, baselayers etc.When Nike proposed expanding their headquarters in that direction, Beaverton at first wanted them to build housing near the MAX light rail station and criss-cross the property with two public roads, expectations defined by the zoning already in place when Nike bought the land. Beaverton's request was mostly consistent with Metro's transit-oriented development plans for the region.Nike has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States.^[22] Most of the factories are located in Asia.The consistently growing textile industry often negatively impacts the environment. Because Nike is a large participant in this manufacturing, many of their processes negatively contribute to the environment.

references: http://en.wikipedia.org/wiki/Nike,_Inc.

3. Describe how the parent control/coordinates with its subsidiaries in other countries or region.

ans:
The degree to which the goals established between the parent and subsidiary location are congruent, thereby increasing the need for coordination between operations.and he degree to which knowledge symmetry exists between the parent organization and subsidiary operation.The degree to which a parent-subsidiary relationship requires goal congruence influences the level of control.n general, the parent company in this stage is guided primarily by a desire to exert control over the subsidiary operation ensuring that the goals of the parent organization take precedence over goals local to the subsidiary (Bartlett & Ghosha 1987).

refences: http://rphrm.curtin.edu.au/2001/issue2/strategic.html

4. How is IT maximized or used by this MNC?

ans:

The degree of PD in MNC parent countries is positively related to the likelihood of staffing a PCN as a top manager. The proportion of PCN board members increases with a higher degree of PD.Control in organizations is related to concerns about uncertainty. Therefore, in countries where UA is high, ambiguity is not tolerated and MNCs from these countries will desire to have maximum control of their foreign operations in order to minimize uncertainty and risk. Expatriates from MNCs may better meet the demand for organizational control.MNCs indicated that high proportion of employees in all ranks has been exposed to various forms of training whether internal or external to the company as a means of correcting skill deficiencies. he XMG study mentioned that, "In order to minimize paralysis on critical operations and sustain growth, companies must extend their recruitment reach, improve their skill development pathways, enrich retention and provide hot skills training on the existing talents in the organization to avoid high additional cost components associated with these skill areas."

references: google.com/http://isjapeyk.blogspot.com/2009/01/technology-its-effect-to-society-and.html

5. WHat were the weaknesses/problems encountered by this MNC from its environment and global setup?

ans: Globalization reflects the growing interdependence of markets, economies and organizations across national boundaries (Herbert, 2000). In order to succeed in a rapidly evolving global market, it is essential that an organization respond to such changes at the speed of light. When strategically positioning itself within the global marketplace, an organization must consider the significant factors that influence of globalization. Such factors include economic, financial, political, and sociocultural changes which create new market standards for competition, productivity, quality, variety, customization, convenience and timeless.

references: http://www.megaessays.com/viewpaper/88168.html

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