The paper "Effect of Multinational Expansion on Performance" Is a wonderful example of a Management Case Study. Multinational corporations also called MNCs are corporations or business enterprises with facilities and a conglomerate of assets in a foreign host country and a parent company in the domestic country (Acheampong and Kumah, 2012). Multinational corporations have benefited most from globalization that turned and still turns the direction of the world. Multinational corporations have risen to play a critical role in the global economy. The proliferation of the MNCs can be traced back to 200 years ago where their scope was limited to part of foreign investments in various countries rather than long term joint venture investments as it is now (Acheampong and Kumah, 2012).
Despite exceedingly succeeding, there are factors that make multinational corporations rethink their strategies, especially when it comes to making appropriate investment decisions. This paper explores the extent to which the world is homogeneous and how this affects the decisions that are made by the MNCs. The Extent to which the World is Homogeneous There are differences eminent within the international environment with respect to political, legal, social, economic, and social factors all of which have implications on the investment decisions of MNCs. Political Environments in the world The political environment differs from one country to another.
Governments are charged with the role of passing regulations and laws which differ from nation to nation (Rugman and Collinson, 2009). Some nations are politically stable than others that have experienced turmoil and political unrest as well as military operations (Rugman and Collinson, 2009). Governments have an administrative role of controlling international trade through imposing quotas, tariffs and the technical standards of the goods to be sold in different countries (Chanakira, 2012).
There are countries that by virtue of their geographical position and diplomatic relation they are more politically stable compared to others. An example of countries that have at one time become politically unstable includes Sri Lanka, Egypt, and Syria (Chanakira, 2012). Political differences are also eminent in the form of leadership that is used to govern a given country (Rugman and Collinson, 2009). There are countries that re still entrenched in dictatorship regimes such as Syria while others under democratic leaders such as Brazil, USA, India, and South Africa among others (Ren, 2010).
The political domain is also different along with the laws that are set to govern the relations between people within the borders. Such laws include health and safety laws, tax policies, environmental laws, consumer protection laws, trade control laws, educational laws, discrimination laws, and tariffs among others (Ren, 2010). All the differences in the political related factors prove that the world is no longer homogenized as it were years ago, but is undergoing a change that will continue to make it heterogeneous. Economic Environments in the world The extent to which the world is homogeneous can be determined by looking at the economic differences that are eminent across the world.
The difference in economic development and environments can best be described by an understanding of economic inequality (Luiz and Visser, 2014). Economic inequality is the level of difference in the population-based on factors such as disposable income, assets, and wealth, which all are combined in the calculation of the GDP of a particular country (Luiz and Visser, 2014).
There are countries that are classified as developed nations while others are classified as developing or moderately developed nations. The developed nations in contrast to the developing and moderately developed nations have higher per capita incomes (GDP) and also have much of their populations living above the poverty line (Mellahi et al. , 2010). The citizens in the developed nations are classified as either middle income or high income in contrast again to the developing nations (Mellahi et al. , 2010). The developed nations include countries like Russia, the UK, Japan, Israel, Brazil, and China.
The moderately developed nations fall in between the developing and the developed nations. Similarly, the characteristics of these nations further align to be in between the characteristics of the two (Mellahi et al. , 2010). Still on economic differences, their different currencies that are used between different countries. This is observed even in countries that belong to regional trade blocks.
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