The paper "Review Summary & Update" is a decent example of a Business assignment. The chapter looks at how MNEs can take advantage of its subsidiary plants in the overseas markets. Ferdows seeks to answer the question: How can an MNE’ s subsidiaries be leveraged as a competitive weapon in the markets they directly and indirectly serve? The answers appear to be contingent on the mentality of the executive managers of the home country. For instance, executive managers perceive their factories as the ultimate source of efficiency and low-cost production. They, therefore, tend to be reluctant to apportion their factory's adequate resources.
Additionally, when they have high expectations of better performance in their foreign-based factories, they tend to demand customer service and innovation. In turn, they allot more resources to their factories in expectation of higher returns. Ferdows further notes that a majority of successful manufacturing MNE perceive their foreign-based factories to be the sources of FSA rather than just their capacity to save costs through traditional offshoring plants. Besides the conventional business motives like trade and tariff concessions, capital, cheap labor, subsidies, as well as minimized costs of logistics, the MNEs need to take advantage of their foreign factories, such as being nearer to the suppliers and customers, to attract proficient employees and to promote excellence in the entire company. Ferdows also discusses three fundamental changes within the global business scenario that influence the decision to assign roles to foreign factories.
The three include declined international trade tariffs during the last 20th century, increased technological sophistication of modern factories, and shortened timeframe for moving from development to actual manufacturing. This is consistent with the notion that a firm’ s successful penetration in the international markets calls for more than just a need to transfer non-location-based knowledge from the home to the host country; the firm's subsidiary has to learn to create its own location-based advantages in the country it operates in.
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