Overview Of United States Multinational Corporation Business Essay

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This paper discusses about United States Multinational Corporation and the work of United States MNC. It also analyzes the challenges and the advantages of FDI for the MNE in United States. This paper determines the best way for MNE in United States for minimizing the foreign exchange risks. It also explains that that how the MNE in United States could leverage government policies in order to maximize the profitability of FDI. This paper includes that the financial management, operations, marketing and human resources needs from the proposed FDI and also outlines a strategy for one area. It also concludes with the essential points that supported to United States MNC.

US Multinational Corporation

I. Overview of United States Multinational Corporation

The Coca-Cola Company was the multinational corporation in United States that was constructed in Atlanta, Georgia. This multinational corporation was a carbonated soft drink in stores, restaurants and vending machines in United States. The MNE produced the concentrate that was then sold to licensed Coca-Cola bottlers throughout the world. The bottlers hold territorially exclusive contracts with the organization produced finished products in cans and bottles from the concentrate in combination with the filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and vending machines. Such bottlers included the Coca-Cola Enterprises that was the largest single Coca-Cola bottlers in North America (Paz Estrella Tolentino, 2003).

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The Coca-Cola MNE also sold concentrated services for soda foundations to major restaurants and food service distributors. It had also introduced other cola drinks under the Coke brand name. This MNE declared their roadmaps that were used to enhance the action and decisions of Coca-Cola Company. The mission of Coca-Cola MNE was to refresh the world, to inspire moments of optimism and happiness and also to create the value and make a difference in the world. The vision of this MNE served as the framework for the roadmap that guided every aspect of Coca-Cola’s business by means of describing the accomplishments in order to continue achieving sustainable growth. The vision of this MNE included the people, portfolio, partners, planet, profit, productivity in order to enhance their vision.

The workplace of Coca-Cola organization included the human& workplace rights, workplace safety and suppliers. The human& workplace rights were an ingredient in this product and in order to make the better commitment in this Coca-Cola product. This MNE was to make dignity and respect to the organization for enhancing the MNE’s production. This Coca-Cola Company had the workplace safety in order to saving the people and this MNE followed the workplace rights policy and fundamental policy to the success of Coca-Cola Multinational Corporation.

II. Challenges and advantages of FDI for Coca-Cola Company

Challenges of FDI for Coca-Cola Company

The political lobbying was the challenge of FDI to the Coca-Cola Company. In the past, there have been many instances in that Coca-Cola Company had resorted to political lobbying in order to get certain polices and laws implemented in their favor. The Coca-Cola multinational company was large that their revenues even exceeded the Gross Domestic Product of some smaller nations and compel them in order to passing the judgments and polices in their favor. This political lobbying was the challenge to this multinational corporation. Exploitation of Coca-Cola resources was not an uncommon phenomenon in the case of FDI. This challenge of FDI provided the provided the short run gains and less profits to the organization and also ignored the sustainability factors to the multinational corporation. The complexity of Multinational Corporation was the challenge that was made by this FDI and this FDI will lead the high cost to the Coca-Cola organization for the production of Coca-Cola. In the case of technology, FDI provided the lack of competitive advantage to Coca-Cola Company and hence this multinational corporation can’t achieve the maximum potential.

Advantages of FDI to Coca-Cola Company

The FDI provided the better economic development to this multinational corporation by means of allowing the transfer of technology. The international flows of Multinational Corporation can be reduced potential risk due to implementation of Foreign Direct Investment and hence Coca-Cola Company can diversify their products and services among global level. The FDI also contributed to the spread of accounting roles and legal traditions of Coca-Cola Company. This will lead the development of Coca-Cola products and services.

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FDI also ensured a huge amount of domestic capital, Coca-Cola production and employment opportunities in United States. This FDI had opened a wide spectrum of opportunities in the Coca-Cola trading of goods and services in United States in terms of import and Export production. The Coca-Cola employment and skill levels will be improved by the effect of Foreign Direct Investment by aiding the setting up of industrial units in various concerns of United States. In Coca-Cola Company, it can fill the tax revenue, management, entrepreneurship, technology in United States (Dileep M. Wagle, 1997).

III. Minimization of foreign exchange rates

The minimization of foreign exchange rates was essential to MNE in order to enhance the Coca-Cola products and services with high efficiency. The best way was Hedge using futures or forward contract. Coca-Cola Corporation will offset the foreign currency holdings with future and forward contracts and it was the act of taking an offsetting position in a related security. This way provided the better security protection to the foreign exchange trade to Coca-Cola production and services.

The utilization of option trading as a strategy was the best way for the reduction of foreign exchange rates. In this case, Coca Cola company can put that allow buyers for buying the financial asset at a predetermined price during the limited period of time or on a specific date and hence it can consider the most dependable form of hedge and also used the forex option in Coca Cola organization. This will lead the minimization of foreign exchange rates. The traditional positions were used with a forex option and hence they can minimize the risk of loss. According to Multinational Corporation, this way was considered as a best way to the reduction of foreign exchange rates.

IV. Government policies for Coca Cola MNE

Government policies were needed to enable FDI inflows and maximize the returns for both investors and recipient countries in Multinational Corporation. MNE could leverage the government policies in order to maximize the profitability of FDI in Coca Cola organization positively. The government policies were used to shaping Coca Cola Multinational Corporation and increasing the revenue of Coca Cola Company. The primary aim of government policies was to create friendly business environment where the foreign Coca Cola investors can feel comfortable with the legal and financial framework to maximize the profitability.

The prospect of new growth opportunities and outside profits encouraged the large capital inflows across a range of industry and opportunity types that can be provided by the government policies in order to diversify Coca Cola Company. The government policy improved the strength of MNC by means of providing the fiscal incentives to maximize FDI. Coca Cola organization reduced the onerous regulations, corruptions and encouraged the transparency in order to increase the profit of FDI.

The policies of government can seek to improve the infrastructure of MNE in order to meet the operational needs of operational investors for evolving the profit of FDI. When applying the government policies to Coca Cola organization, it was possible to grow the income and profit of FDI in Coca Cola organization. Coca Cola MNE could leverage the government policies for setting up promotional agencies to foster foreign direct investment. This MNE promoted the FDI friendly policies, identified prospective sectors and investors and also structured specific deals and incentives for the maximization of FDI by means of government policies.

The formation of human capital was a vital one in making the growth of FDI inflows in Coca Cola Company that enabled the technology, IP-driven FDI and highly skilled personnel in MNE. The MNE also utilized the government policies in order to providing skills, developing the workforce as well as to meeting the needs of foreign investors. Coca Cola Company also used Global Trade Associations in order to make the profit for FDI by making the positive environment among the Multinational Organizations. The government policies ensured the investors in order to provide the favorable environment for the profit maximization of FDI. By means of these ways, Coca Cola Company could leverage government policies for the profit maximization of FDI (Frank B.Cross, 2011).

V. Foreign direct investment

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FDI played an extraordinary and growing role in global business. The FDI provided a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing to the global business. The financial management, operations, marketing and human resources were based upon the FDI in order to enhance global business. These departments need portfolio investment, foreign loans and foreign direct investment in order to developing the infrastructure of these main departments of global business. These main department needed the effective work force, manufacturing process and management practices and effective exchange earnings from FDI of global business in order to making the MNE perfect. The FDI contributed to foreign exchange ratings, employment creation and increment of income, skilled workers to these departments for the globalization of business. These departments also needed the attractive climate, economic stability, guarantee of property rights from the proposed FDI.

Improvement of capital budget was the strategy for financial management. This strategy was the planning process in order to determine that whether a multinational organization’s long term investment including new machinery, replacement machinery, new products and research development were worth. This capital budgeting improved the financial management by including several capital budget that were accounting rate of return, payback period, profitability index and internal rate of return. This strategy was also used to make the proper financial management for enhancing the financial management.

Conclusion

The description of Coca Cola Company and the workforce of Coca Cola Company were discussed. The challenges and advantages of FDI for MNE in United States were detailed. The best way for minimizing the foreign exchange risks and the government polices to maximize the profitability of FDI was examined. The needs of main departments from the proposed FDI were included and the strategy for financial management was concluded.