Potential Internationalisation Of Intel Overview Economics Essay

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Multinational company is a company which operating in two or more than two country but managed by headquarter which allocated at the origin country. Several features that a company have that will be categories in multinational company is having a facilities, assets and investment at other country, a quarter of the profit contribute by the company allocated at other country and able to provide a improvement of economic, technology and living standard for the country which invested by the company and the company able to get the resource like labor or raw material with a cheaper price to increase the profit.

This type of multinational company will sell their product almost the same around the world. For an example, Kentucky Fried Chicken and McDonald are the fast food company from United State but when they trying to sell their product in foreign country they will change some of the product but the main product like fried chicken of Kentucky and burger from McDonald will mostly maintain the same level.

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The negative view of globalization around the people will be how the way that the multinational treat the staff and the environment in the country they invested. For an example, when a multinational company invest into a poor country, the people in that country would not demand for too many things from the employers so the company will pay a very little amount of money and demand them to work for a longer hours for the company with a very bad working condition and they also might polluted the country due to the way they settle the waste of the manufacturer like throwing toxic into the river or sea.

In United State, the government not allow corporation to do any contribution to candidates and parties. But for state, most of the state are allow corporation to make contribution to the local candidates. Intel as a multinational company, they also support some of the state candidates which having a same mission to the country and it would not affect the shareholders of the company. In United State there also having lots of rules and regulation for the company which wanted to run their business in the country like licensing, rights and other rules. Intel as a multinational company also have face a lot of legally problem that being sued by other company or competitors according to the law set by the government. For example, Lehman Brothers Holding Inc case happened in year 2008 and Commonwealth Scientific and Industrial Research Organization (CSIRO) case in year 2005.

In year 2009, United State have announced their official gross domestic product at amount of USD 14.12 trillion which ranked at the second place compare to the world and in year 2009 they actually having a drop of gross domestic product compare to year 2007 and 2008 and this actually represent the total purchase power in United State. Out of the total gross domestic product, agriculture sector have contribute 1.2%, industry produce 21.9% and the other 76.9% is contribute by the service sector. Which mean that services sector actually is the biggest source for United State to get their income. In United State there also ranked in number 10th for their gross domestic product per capita in the world, mean that the average consumer purchasing power is still strong due to the ranking and the amount of USD 46,000 but there is also a decrement compare to year 2007 and 2008. And the unemployment rate in United State is high that recorded as 9.3% and have a big increment compare to year 2008. From these we will know that even the economic status of United State is dropping but there still one of the strongest economic country in the world. But for Intel, when there is a drop of the average consumer purchase power it will also affect the sales of the product when the purchase power become lower, our company will face the loss of customer.

Social

In July of year 2010, the total population of United State had reach to the amount of 310,232,863 people and it actually the third of the highest population country in the world. 20.2% of the population is between 0 to 14 years old, 67% is in between 15 to 65 years old and another 12.8% will be above 65 years old. And the fertility rate if United State had reach 2.06 children per woman. For Intel corporation, the customer that they targeting is actually people around 20 years old to 50 years old the people who still studying and working. So from the demographic of the data we can know that there is around 50% of the total population of United State will be the potential customer for them and United State market might grow bigger due to the fertility rate that exceed 2.00 because this date actually bringing a information that the population of United State will grow bigger and this will lead to a grow of the demand in the market in the future 10 to 20 years if the fertility rate maintain the same.

Technology

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United State as a first world country, it actually has a very high technology level. In United State, there will be lots of the company that needed computer to run their business due to the main sector that contribute most into the gross domestic product is industry and service sector and most of the education sector also encourage student to use computer to replace textbook. So from this information we actually can found out that in United State which need lots of support from computer, and Intel as a leader manufacturer of microprocessor and some other computer hardware United State actually having a lot of potential market for them to have a grow in profit. Besides that, United State also having a very high level of education which mean that United State able to produce a lot of professional engineer to the market and Intel will very likely to build a research and development center in United State due to the professional available in United State market and the technology in United State.

PEST Of Other Countries

Politics

In year 1971, Intel have started the first manufacturer in Malaysia but due to the Foreign Direct Investment rules and regulation in Malaysia which set In year 1970, 30% of the total equity of Intel Corporation must be belong to a aborigines of Malaysia. According to the law set by Malaysia government, Intel actually able to save 30% of the capital invest but at the same time Intel will loss 30% of profit because Intel only own 70% of share of Malaysia’s Intel manufacturer and the other 30% of share are belong to aborigines of Malaysia.

Economic

In year 1996, Intel had decides to invest 300million USD in Costa Rica and the investment of Intel in Costa Rica actually help the country to have a improvement of the country’s economic due to the contribution of Intel to the export, gross domestic product, job create and the company’s expenditure in Costa Rica. For now Intel has created around 2900 direct employment with another 2000 indirect investment in Costa Rica. The amount of gross paid of Intel in Costa Rica to the employment is around 44million USD and the purchases of goods and services of Intel in Costa Rica will be around 50million to 150million USD per year.

Social

Vietnam is a country which having a total population of 89,571,130 people. Intel would very likely to open a factory in Vietnam is not because of the high education of the people in Vietnam and the education of Vietnamese is quite low the age that they only able to study will be 10 years old. Intel will like to invest in Vietnam is due to the attitude of Vietnamese toward their job, Vietnamese are very hardworking people and they willing to learn everything and their learning speed is quite fast in once. Besides that, Intel will like to invest in Vietnam is also because of the large population in the country. As the twelfth largest population country in the world, once Vietnam had build up their economic and technology level in the country it will be a high demand of IT product and this will provide Intel a big market to enter.

Technology

Malaysia is one of the developing country and the electrical supply also available for most of the resident area and able to support the operating of the factory. Besides that, Malaysia also has several main highways that connected to every state. Due to the electrical supply and the transportation that available in Malaysia in year 1971 is one of the reason Intel invest in Malaysia, with good electrical supply in a country, Intel only can operate the factory in full capacity and able to save the time to transfer the stocks to the port or airport to the other places. And now in year 2010, Malaysia having a better technology like in internet and the government also encourage some of the secondary school to use computer to replace the textbook for study due to this kind of situation, Intel will still invest in Malaysia is due to the demand of the Intel product in Malaysia and as developing country, the technology of the country will still growing. When the technology of a country is growing, demand of technology product like computer will keep increasing and this will lead to a grow of demand for Intel product in the market.

Potential impact of globalization to Intel

Reluctant of Intel product in some countries

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In year 2010, United State, South Korea and Japan have decided to increase the military cooperation between each other due to the artillery fire of North Korea in the sea, and this decision actually had make the relationship of North Korea and the other three countries become worst. The bad relationship between those countries might slowly to a war in future time, no matter who win in the war. The feeling of citizen of North Korea will very likely to have a very bad image towards the other 3 countries and when Intel trying to build their manufacturer or introduce some new product in North Korea might get a very bad respond that North Korean might not wanted to be employed by Intel and they also will not purchase any Intel product due to the bad feeling against United State and this will lead to loss of Intel on the money they invest to North Korea and the energy to plan to enter North Korea market.

The cost of raw material and the exhausted of raw material

In year 2010, there are at least 3 mining accident happened around the world, the first accident which happened in Chile and there are 33 miners being trapped in the mine field, fortunately the 33 of the miners being saved after 69 days. After this accident there also 2 more cases that happened in Mexico and China also. While there is accident in the mine field, there also a opportunities that the mine field will be destroy and lead to a problem of lack of raw material like iron, ore and some other raw materials depends on the mine produce by the minefield which having accident. When there is a shortage of mine, the price of that particular mine will definitely raise in the international market. Intel as a microprocessor manufacturer, they also using some mine to produce their processor when there is a raise of price of mine, Intel will definitely facing a financial problem and the operating problem due to the high price of mine. Besides this problem, in the world there also a numbers of raw material are going exhausted, as example petrol. When the petrol is going to exhaust, there also will be a big problem to world due to the important of petrol as fuel in the world. So when the fuel being exhaust most of the company will not be operating without a replacement of petrol and this will lead to a degeneration of technology and economic to the world as well. Without fuel, there is no interaction between some countries even some states people will not know what the other human facing out of their country or state as well.

Natural disaster

In the world, the thing that human cannot be avoid will be the change of the natural. Natural disasters around the world like earthquake, hurricane, and explosions of volcano, flood and drought. While there is a happen of natural disaster in a country will lead to loss of country, a company or even every individual in that company. Intel Corporation also will face the problem of natural disaster due to the manufacturer that available in more than 50 countries. For an example, when there is a earthquake happen in Shenzhen, and Intel factory are collapsed due to the high seismicity. While this happen, Intel will face a big loss due to the amount of money invest to the factory and they also might loss the public mind of the world if they do not treat their staff nice and will lead to a situation that the people in the world boycott Intel’s product.

Strategy to overcome the potential impact

Joint venture with other company

When North Korean really having a bad image toward United State and unwilling to purchase the product from Intel, Intel Corporation can choose to joint venture with another technology company in North Korea or some other company exist in Asia Region. While there is a joint venture between 2 company, Intel will not appear with current name but with another new brand which joint venture with other company and the origin of that company will also not in United State but in Asia, when they come out as a new company in North Korea, North Korean will start to accept the product which not come from a United State company but a new company which come from Asia.

A new invention to replace current raw material

The exhaust of the raw material in the world would not be avoided. So the only way for the world to solve this problem will be a new invention that able to replace the function of the raw material which being exhausted. For an example, Malaysia is keep doing a research on palm oil to replace the function of petrol and the cost spent for palm oil is much cheaper compare to petrol and palm oil is a resource that can be renewable. So since this evidence is a evidence that unable to avoid, Intel can try to increase the strength on their research and development department with not only to improve their exist product but also trying to do some research on some raw material to look for some renewable material to replace the raw material that unable to renewable.

Build foundation for the people and country suffer in natural disaster

Natural disaster is evidence that unable to be avoided. Since Intel unable to avoid the loss in the happening of natural disaster, Intel can try to build a foundation to help the people and the country to rebuild their home. Intel can try a program that Intel will donate a certain amount of money to the foundation when there is any product being sells. The total amount that raised up by Intel with every product sell might unable to support a country to rebuild their country but this activity will be at least an encouragement to the country facing natural disaster that the world are helping them to rebuild their home and through this activity Intel will also get a very good reputation and awareness from the public, and consumer might very likely to purchase Intel product even a higher price because they will have a feeling that when I purchasing this product I also making a donation to the country which suffer in natural disaster.