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A Multinational Corporation (MNC) or Transnational Corporation (TNC), also called Multinational Enterprise (MNE) (http://www.answers.com/topic/multinational-corporation), MNE is an enterprise or association that administers production or distributes relevance in many countries. It can also be assigned to as an international corporation (http://en.wikipedia.org/wiki/Multinational_corporation).
The MNCs are growing is indicated by the fact that while according to the World Investment Report 1997 there were about 45000 MNCs with some 280000 affiliates, according to the World Investment Report 2002 there were about 65000 MNCs of them with about 8.5 lakhs foreign affiliates. Only less than 12 percent of these affiliates were in the developed countries. (Cherunilam Francis).
There are three most important characteristics of MNE. On the basis of these characteristics MNE entered in to new foreign market these are as:
Before entering to new foreign market MNE first see the environment factor of there, where they are planning to enter what type of and how many competitor are there, which product they are finishing, what should be their strategies regarding product, what is the market position of that product is that product success in the market, customer like it or not and why they like and why they don't like, what changes they want in running products. What are the terms and conditions of government of that country, like bans, rebate, tax, investing limit. They were looking financial institution, for finance for their company in future. MNEs also see the supplying facilities at location, how can they supply goods to the market.
Then, they are looking for resources available there, raw material which company need is available there or not, if not it increase their product price because if company needs raw material they import from other country so, the cost of product is increases. Labour is available or not, when a MNC is going to start business in new country ten they need human resources also. They also collect the information about the country area and patents and trademark, product they are planning to launch is must not be patented or trade marked by any other company.
By getting knowledge about those entire common things company plan to launch their running or new product in foreign market, and make their strategies about launching and getting success of the product.
What role does the World Trade Organization (WTO) play in the international business arena? Is the WTO helpful to international trade or is it a hindrance? Why?
World Trade Organization (WTO) is an agency which encourages trade between member's nations administers global trade agreements and resolves disputes when they arise. (http://www.investorwords.com/5352/WTO.html)
World Trade Organization (WTO) was formed in 1995, on the basis of General Agreement on Trade and Tariffs (GATT), WTO is one and only international organization which deals with the trade and trade related problems between member's nations. (Paul Justin) http://books.google.co.in/books?id=fANfPvq2JqsC&printsec=frontcover&source=gbs_similarbooks_s&cad=1#v=onepage&q=&f=true
WTO plays a very important role in international business; the WTO settled the disputes between the member's countries officially according to their rules and regulations. Many countries are members of WTO so; WTO provides more choice of products (IB second edition, Justin Paul, prentice hall of India, 2005). WTO supports free trade, fair competition and encourages the development. (http://www.wto.org/english/thewto_e/whatis_e/tif_e/fact2_e.htm). WTO gives a huge and successful platform to international business through agreement and also provides a form of negotiations to its members regarding trade related matter for better result and such negotiations may be decided by ministerial conference.
It has a cooperate with International Monetary Fund (IMF) and International Bank (World Bank) for reconstruction and development and for making better connection in global economic policy making for the reason of building better understanding and coordination between WTO and IMF and World Bank. It also impose discipline on countries
These are the main functions of WTO:-
- WTO assists developing members with their trade policy issues provide developing countries trade related programs.
- Settling of disputes as dispute settlement mechanism:
o Case - On 23 Jan. 1995, Venezuela complaints to the disputes settlement body of WTO that the United States (U.S.) was applying rules that separated against gasoline imports and formally called for actions with the U.S. The U.S. invoked and the body accomplished its report, and the disputes settlement body accepted the report on 20 May 1996, after one year and four month disputes settlement body agreed with Venezuela and the U.S. agreed agree with Venezuela and the complaint was first charged on 26 August 1997 and the new regulations has been signed on 19 August. (http://w3.bsa.org/eupolicy/Role-of-the-WTO.cfm)
- Cherunilam Francis (2004), International Business, third edition, Prentice Hall India, New Delhi, Chapter 9, page no. 360 second paragraph.
- Paul Justin, (2005), International Business, second edition, Prentice Hall India, New Delhi,