How multi-national companies can benefit from globalisation drivers

University of Warwick

How Multi-national companies can benefit from Globalisation drivers

by

 Marcus Matthias Keupp

Inhalt

1 Introduction 1

2 Definitions 1

3 Global Drivers 1
3.1 Changing World Markets 1
3.2 Macroeconomic Change 2
3.3 Technology 2
3.4 Customers 3
3.5 Production and Distribution 3

4 Benefits 3
4.1 New Markets 4
4.2 Strategic Advantage 4
4.3 Risks/Costs 5
4.4 Skills/Knowledge 5
4.5 Products 6
4.6 Governmental risks 6

5 Conclusion 7

6 APPENDIX 7

1 Introduction

This essay describes global drivers leading to the increased emergence of strategic alliances (SAs) and cross-border joint-ventures (JVs) and implied potential benefits for multinational firms (MNEs).

Applying Yip′s framework1 (viz. appendix), drivers and benefits are analysed. It will be shown that importance of drivers and likelihood benefits hinge upon the MNE and its industry and determine its engagement in SAs and JVs.

2 Definitions

A MNE is a firm ′headquartered in one country [but with] operations in other coun-tries′1.

A strategic alliance means two firms collaborating to mutually profit from market share, knowledge and resources. The point is ′for a company to emerge from an alli-ance more competitive than when it entered it′2.

An international (cross-border) joint venture is ′an agreement between two or more partners to control an overseas business′3. ′Joint ventures may fill intermediate-term needs but may also mortgage the long-term global future′4.

3 Global Drivers

′Industry globalisation drivers are externally determined [and] create the potential for a multinational business to achieve the benefits of global strategy′1. These drivers′ relative importance varies across industries and firms.

3.1 Changing World Markets ¹

MNE’s home markets are either too small to sustain growth (Nestle in Switzerland) or are saturated. Therefore, MNEs face the pressure to expand abroad to ensure future profits. Companies must obey global quality standards, as ‘almost every product market in the major world economies has foreign competitors’ ². The emergence of global players puts pressure on competitors to either expand their market, too. This driver is important to every MNE. No industry or firm operating internationally can ignore this change.

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1 Tatoglu, E and Glaister, K: “Strategic Motives and Partner Selection criteria in International Joint Ventures in Turkey (…)”, Journal of Global Marketing, Vol. 13, No. 3, 2000, pp53-92

2 Kotabe, M et al: “Strategic Alliances in emerging Latin America (…)”, Journal of World Business, 2000, Vol. 35, No. 2, pp114-132