Why do national firms become m
Why do national firms become multinational? Critically Discuss. We must first define between a national firm and one that is multinational. A definition of a national firm could be "a firm that's market is mainly in the country it sells into and has no Foreign Direct Investment in any other country apart from the one in which it sells into. A multinational on the other hand is a lot harder to define because over time the very nature of a multinational has changed. For Example in 1958 Maurice Bye began to see and recognise multinational enterprises (MNE's) by the definition Multi-territorial firm indicating that a MNE was purely given the name by the amount of countries a company occupied. By 1960 this had already been updated with David Lilienthal new definition, Multinational Corporation that has become a recent standard definition. Academics see a multinational in greater depth and again the definitions are always slightly different, J.Dunning defines a MNE as "...an enterprise that engages in Foreign Direct Investment (FDI) and owns or controls value adding activities in more than one country (1992). Dicken on the other hand believes "a Trans-national corporation is a firm that h
For example in the agriculture commodities United Brands, in the 1920's still wanted to gain from all of the above reasons, e. On the other hand Steven Hymer argues "that it must have an advantage over its host firms" to become multinational. as the power to co-ordinate and control operations in more than one country, even if it does not own them. As Kenwood and Lougheed would argue there has been an international economic market from the 1820's but perhaps "industrial growth accelerated in the last quarter of the nineteenth century, the consumption of raw materials increased phenomenally. If we look to the UK this is apparent with such huge plants as the Nissan factory in Sunderland a recognised black spot in the UK for employment. For a national company who has a large foreign market but does not have other premises abroad there often are a lot of tariffs to pay. Today though most FDI goes into developed countries like much of Europe. Many large national organisations have tax advantages or grants from overseas governments which encourages them to become multinationals for example the European Union has encouraged overseas investment. We can therefore assume for the purpose of this text that a multinational is"" firm that has headquarters in one country, but with bases, manufacturing or assembly plants in others. What has been key to there success is the improvement in technology, transportation, production processes and communications. Although multinationals can be defined into three categories, natural resources e. Perhaps Richard Longworth in his recent publication, The coming crisis for first world nations, 1998 has got it right with describing multinationals as Global Corporations. The company must rely on export and expansion of export sales to justify building new plants abroad, a Sony power point presentation found on the internet argued the criteria for a MNE to be "A companies whose foreign sales are at least 25%. Post war it was going into developing countries like Japan and South Korea, here we see the greatest growth in FDI, data shows it rose by 251%.
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Acceptance Essays
