The paper 'Opportunities and Threats of Globalization: Analysis of Cemex Company " is a perfect example of a marketing case study. Over the past decades, multinational corporations have taken a large market share in the global market. Multinational corporations commonly referred to as worldwide enterprises are organizations that control and own production and manufacture of goods and services in one country or more other than their native country. Typically, multinational corporations export and import goods and service, make vital and significant investments in overseas states, selling, buying licenses in foreign markets, engage in contract manufacturing, and finally open assembly facilities in foreign markets. Until recently, multinational corporations from developed economies dominated the global market as well as creating opportunities, expanding and indulging in foreign direct investment in developing economies of Africa and Asia.
Multinational companies from industrialized economies like the United States, Britain, and other economies invested in emerging markets and contributed much knowledge and experience to other multinational companies in emerging markets. Recently, the trend where multinational companies from developed economies controlling the global market have drastically changed with multinational corporations from emerging markets taking charge of the global market. MNCs from developing and emerging economies are currently expanding and acquiring assets and companies in developed countries.
The impact of MNCs in emerging markets cannot be ignored because of the tough competition they are giving to MNCs in industrialized economies. The emerging-market MNCs' influence and control have increased considerably, and majorities of them have developed into household names across the globe. By learning from the multinational corporations of developed economies, multinational corporations from emerging markets have turned out to be major global players.
Similarly, external forces like low labor costs, and government assistance make multinational corporations in an emerging market to expand their influence in the global market share. An example of a multinational corporation in an emerging market is the CEMEX. The document presents an analysis of the threats and opportunities CEMEX decision maker face as well as analyzes the main lessons that international business managers learn from different markets. The theoretical background of multinational corporations Internalization theory The internalization theory analyses international business behavior. The theory mainly focuses on market imperfections in the product markets.
The theory focuses on transaction cost theory, which states that transactions occur in institutions if the transaction costs are higher than internal costs in the free market. The theory further suggests that internalization results in bigger and many multinational enterprises since knowledge is a public good. According to Forsgren, (2013), pp. 100-120, the internalization theory, internalization occurs when multinational corporations and firms perceive that benefits exceed costs. Moreover, when internalization leads to overseas and foreign investments an organization might have to incur commercial and political risks due to market exoticism.
The risks are denoted as the additional costs of doing business abroad. When the additional costs are much higher, multinational corporations have to outsource or license production to other firms or produce at home and export to foreign markets. Eclectic paradigm theory According to Cantwell, (2015) pp. 67-90, eclectic paradigm theory is an economic theory also known as the OLI-model or framework. The theory is an improvement of the internalization theory. The model combines several international theories (Cantwell, (2015) pp. 67-90). Besides the organization structure of a firm, the theory adds the other three factors, which are important for multinational corporations.
Advantages of ownership, location and internalization are the key factors that determine the success of multinational corporations in foreign markets.
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