The definition MNEs can be said in many ways. Actually when any company goes to do business in some different places in different countries and carries some characteristic with their huge subunit or segment or division, large labor, large economy, huge capital then this types of company is called MNEs(Multi National Enterprises).
All through the overall behavioral activities to concern the MNEs characteristics that are governed by operate in there functional areas to evaluate and earns the implementation and realization strategic vision is fully depending of their human resources. The overall commercial transactions, private and governmental, sales, investments, and transportation take place between two or more countries.
The issues of the competitiveness based on infrastructure of building, strengthening cooperation between public and private institutions and improving educational performance. These issues are important because lot of policy making and hard task needed to cope with the MNEs challenges for globalization. The Recent studies of national competitiveness have two messages for strategy makers:
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Competitive advantage can be created or, at the very least, raised significantly.
The improvement of competitiveness within an economy should be a key element of national export strategy [Kirchbach, Friedrich Von, International Trade Forum, January 1, 2003]
For example : The federal government's share of research funding along with nationwide range almost 70 percent in 1960s in compare with 30 percent less then today. Most of the Economical Slack has been taken by the industry but beside this, the state is taken the lead.
Analysis: The Most relevant Article can be defined in MNEs is the Political Environment, the Economical Environment and the Cyber terrorism.
Political situation interact one of the most prominent sector in a society where the viable acting unit. Domestically and internationally business conduction influence along with the countries political system.
For Example, in Hong Kong the political change, which brings result of China, took control in 1997 and fall hazard situation of many mangers to believe that China would change the interpersonal business relationship between government, regulation and business forum with more influence and strong balance in business atmosphere.
Confiscation, Expropriation and Domestication:
Confiscation is concern as a most political challenge. In confiscation rules any company can be sized by without any payment.
In expropriation any company can be banded by the host country.
In Domestication host country may take the business organization as a domestic wise.
The Impact of Ideological Differences on National Boundaries:
The cultural, language, religion, political ideology and history have vastly attracted by national boundaries. For example in European, the Austro-Hungarian, Empires distinguish into Austria, Czechoslovakia, Hungary, Yugoslavia and Romania after First World War. But after Second World War countries often were formed individual ethnic groups.
The Impact of Political System on management Decisions:
When a manager evaluates a country for business place to do business then need to evaluate very carefully the political challenge. Organization does this because political Challenge or political bad situation creates bad effect on business.
The legal Environment:
Another external dimension of international business environment is legal environment which is closely related to political environment. Management must be aware the perfect legal system of particular the country's.
For example: Hong Kong was moving away from the legal traditions established by the British toward the impact of Beijing.
Another major challenge that companies face in the global environment is consumer safeguard. The dealing system of product liability is one of the issues. Different Legal system give people different Safeguards.
For Example Japan has less access to and assistance from the legal community in Japan then American Consumers do in the United States.
The Legal Profession:
For a verity of service MNEs must use lawyer, such as protecting intelligence property and negotiating contracts. There have still large firms for servicing multinational clients. But many firms take huge service charge for MNEs . To give the service to the clients MNEs have taken a wide range of invested in abroad for expending business Opportunities.
[International Business Management Lesson 15, the Political and Legal Environment Facing Business, Rai University,
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Uzbekistan taking Addition Measures to Deepen Privatization, "Interfax Financial Time Information Limited, April 18, 2003]
Exchange Control: The amount of capital living of that country, foreign exchange, capital formulations are very important part in Exchange control.
For example: When Venezuela imposed currency control after a two-month-long national strike in an attempt to stem the flow of capital from the country.
Local-Content Law: home countries local law, local purchase local substitute law, local business rules and regulation are included in here.
Import Restriction: The selective restriction like Import restriction of present raw materials, machines and spare pars are common for industry to purchase with in the host country.
Tax Control: taxation rate of host country, raw material tax, production related material tax, final product tax which help to control the verbal product maintenance.
Price Control: Some product which is public interest like as food car, pharmaceutical, gasoline and some other products often subjective to price control.
Labor Control: Labor Union is very strong with the help of government and labor price can be high in some cases. So this type of problem is made some great issues.
["Brazil: Forex Regulation," Economist intelligence Unit, April 23, 2003
"Russia Mulls Rice Import Restrictions," Interfax, February 19, 2003]
Internet is now a day's very important way to communicate with Global business. Although it has some bad practice this is Cyber Terrorism. The internet is a vehicle for terrorist attract by foreign and domestic arena.
For example: The Melissa Virus that damaged the websites of CNN, yahoo, Amazon and ZDnet.com ["Doing Business in a Dangerous World," Harvard Business Review, April 2002]
Common Challenges of MNEs :
Social and Cultural: When MNEs work in different countries that moment they face some social and cultural factor like as language, religion, music, values, ethnicity, Literature, etc.
When the MNEs set up their industry in particular countries then they have to concern on that countries government rules and regulation such as tariff, scale of reservation, policy trend of business, Taxes and sometime its burden to maintain for the enterprise to such of that regulation.
Customer Test and Preference:
In the world customer divided in three classes such as higher class, middle class and lower class. Within this three level of class peoples basis criteria is different like as product price, usage, familiarity, attributes, attitude, lifestyles, salary , demand, want, need etc.
Economic and Competitive Context:
By using the economic criteria like Buying parity, GDP,. Nature of Industry, infrastructure Development and Competitor's from Different Countries.
MNEs operate their business in different counties in the world with the co-operation of local management body with the help of head-quarter management body.
They take different types of strategy in different task of operation in their business to catch the market place with the help of Competitive management Strategy.
The measure their performance, through the evaluation of economic performance, management trend, raw materials, production facilities and competitiveness advantages with competitive environment.
[Institute for Higher Education, Global business Strategy , Chinmaya parija, 2008]
Analysis and Discussion:
The Political Situation, political change, the economical Change, current economical situation create great impact on MNEs Business. A multinational may have operated their business an efficient for an organization and making effective performance in the economic market of the world.
Above the porter statement "Firms not Individual Nation, Competing the International market" is the moderate theme story of Globalization and belong with this statement is emphasize the compositeness of a firms to the international market arena and it give assure that the firm compete in international market not as an individual nation.
With, my analysis the major challenges of MNEs likes Political Environment, Economical Environment and Cyber Terrorism and some Common Challenges also face in global business market. In my recommendation to overcome this challenges of MNEs those as are follows -
Purely assessment of the present political environment of host country where they do there business
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Good political knowledge and how to tackle the critical political situation in the Host country
Technical Assessment with the help of proper Investment policy makes sure that the investment should be better in return of investment appraisal.
Actual survey report, the proper economic analysis help to make a perfect plan.
National GDP, Life style, Consumer trend, Culture, Historical and Geographical background of a country need to proper adjustment to their present situation.
Collaborative relation with the present management body to their local participants
Collaborative management practice is essential for maintaining their functional activities.
Innovative and Competitive strategy needs to develop to the MNEs for their long term Sustainability.
The multinational enterprise compete the whole world economic market. Multinational enterprise(MNEs) is a corporation while they operate their business two or more countries for various perspectives, including the chip supplying of raw materials, low labor costing, capturing the equal market and.