The paper “ The Evolving Multinational Enterprises Environment – Multinational Companies from Emerging Economies” is a thoughtful example of coursework on business. With the present global business landscape, business needs have evolved and as such, many businesses have achieved global logistical and operational capabilities. This is attributable to increased competition within the global market, which has been an all-time high. Basically, businesses are increasingly suffering complexities of doing business in global markets due to myriad problems. As such, international businesses need to understand such complexities for them to enhance their efficiency and attain a competitive edge over host country enterprises.
According to Agosin and Machado (2007), doing business in the international market presents many opportunities for the organization as well as challenges. Having a clear understanding of the target country is advantageous for a business since it gives it insights in terms of logistics, tax laws, currencies, culture among other aspects. The business also gets to know which products to adopt in various markets depending on the demand. In addition, political and economic environments are other factors with a serious impact on global operations.
Therefore, it is paramount to understand and abide by the rule of law and regulations of a country that an international business wishes to establish its operations. The present paper seeks to analyze the challenges faced by multinational companies when doing business in emerging markets such as South Korea, China, Brazil, and Russia among others. In addition, this paper discusses factors that make emerging markets more attractive to foreign direct investments. Challenges facing multinationals doing business in emerging marketsLack of qualified trade partnersEmerging economies are maturing gradually. This means that they are evolving very fast as they seek to compete with their developed counterparts.
Economies such as India, China, and Brazil continue to be loosely connected with the rest of the global economies hence making it hard for corporations established within these economies to access international markets. For instance, TATA Enterprises is an Indian car manufacturer. However, due to the formation of the European Union market, the Indian car manufacturer finds it difficult to penetrate the European market which is dominated by European and American based car manufacturers. State involvementDisappointingly, big firms in the emerging markets have diverse organizational forms.
In this vein, the most common phenomenon is domination by the state sector. This aspect contradicts the free market mechanism common in established economies such as the United Kingdom and Germany. A good example is the Republic of Korean where most organizations are government-owned and if not the government has a controlling stake. One such company is the mobile phone giant, Samsung, in which the Korean government holds a stake. Thus, as the markets develop, the inefficient and improperly governed organizations die out, and their place is taken by private enterprises. Absence of reliable government authoritiesMultinational Enterprises (MNE’ s) from developed countries suffer from both institutional and competition challenges.
Back at home, MNE’ s enjoy vast domestic markets that help them achieve economies of scale. In this regard, their competitive advantage tends to be quite different from those in emerging markets (Aw and Tang, 2010). This is attributable to institutional pressures brought about by the nature of emerging markets. Undoubtedly, many institutions, which are key in the establishment of a favorable environment for multinational businesses, are plagued by such factors as underdevelopment, weak labor protection laws and lack of transparency among others.