...The Challenge for Multinational Corporations in China: Think Local, Act Global – A Summary When multinational companies (MNCs) started to get entrance into the Chinese market, they were received with open arms. This includes them enjoying government privileges other local companies were not entitled to. The Chinese consumers also preferred goods from the MNCs, and not their local companies. This however, took a twist when in the year 2000, when the per capita GDP rose in the country to $1,000. The perception of the Chinese toward the MNCs changed further when China became a member of the World Trade Organization in 2001. Their earlier privileges were withdrawn, as even the Chinese started to embrace their local companies. Conditions ever since have become tight for the MNCs, as they are now expected to strictly adhere to the Chinese standards in their businesses. Although the MNC have positively contributed to the Chinese economy, much of their challenges lie within the framework of adapting to the local Chinese expectations in their business practice. For instance, it is important to be aware of the kind of advertisements to use, which cannot be considered offensive by the local Chinese people. Most MNCs have difficulty understanding the expectations the Chinese have of them, since the Chinese are sensitive people, with respect to moral integrity and social prestige. For the MNCs to survive in China, they must “think local and act global,” meaning they should conduct their...
Words: 415 - Pages: 2
...The definition of Multinational Corporation is hard to explain but in easy words is when a company sells its goods and services in more than one country is recognized as a Multinational Corporation (MNC). The impacts of Multinational Corporations can be negative and positive. But in today’s assignment I am going to talk about Chinese cultures impact on Multinational Corporations. Since 1970s, the multinational corporations in China has changed dramatically when the nation opened its economy and welcomed the direct investment. During the 1980s, MNCs like Motorola, Philips and NEC was welcomed in China with open arms. They used to pay half of the imposed tax rate from the local companies, and also they pay no duties on their goods imports. However, in the beginning of 2000, when per capita GDP went above UD$1,000 and when China joined the World Trade Organization, the consumers and the Chinese government changed their perceptions of MNCs drastically. Multinational Corporations main goal was to fit national interests. Then because of the National cultures impact, MNCs started to follow this rule “Think local and act global”. Chinese consumers have also become more demanding and as a result they don’t really see the difference between products which are made by the MNCs or Chinese companies. For example in 1977 there were 1 million cars in China, by 2008 there were 51 million and now there are 85 million cars in China. Every day that number increase by 38 thousand. Which means somebody...
Words: 994 - Pages: 4
...Name Professor Course Date The challenge that faces Telsa Motors trying to enter the Chinese market Organizational behavior is centered on how people act or behave in an organization. An organization is simply a group of individuals who have the same interests and are brought together by similar or common goals (Lam and John 123). Organizational behavior is, therefore, the study of the factors that influence how employees and other people respond, feel and act to organizations and work and how the Company is affected by the external environment (McShane, Steven and Glinow 321).Organizational behavior reveals how people interact in a group and how the environment affects this interaction. The subsidiary of Telsa Motors in China was registered in the year 2006, but full operations began in 2013 when the trademark issue for Telsa Motors was resolved. Organizations must learn that their trademark is an international recognized concept but in some overseas market there can be problems with the mark of a Corporation. The best way to overcome these matters can be through franchises with existing domestic Corporations. Telsa Motors, Inc. is an American multinational Company that manufactures designs and sells electric vehicles, components of power train and battery products. Telsa is a publicly traded Company that sells its stock on the NASDAQ stock exchange market under the symbol TSLA. Marc Tarpenning and Martin Eberhard started Tesla Motors way back in 2003 (Hettich and Stewens...
Words: 3588 - Pages: 15
...liberalization of world trade has resulted in emergence of many Multinational Corporations that seek to explore new markets, increase sales and profits. Expanding to overseas markets is every home-based business’ desire in the long run; most companies pounce on the opportunity as soon as it presents itself. Internationalization however poses business challenges in product selection, marketing and ethical issues. Companies e.g. Daewoo that expanded rapidly into international fora oblivious of these challenges lost not only their business in the host countries but also valuable capital investments. Ethical challenges are however the most common and contentious. This is occasioned by differences in the requirements of home and host countries (DeGeorge, R.T. (15). For instance, friendly payments are called gift-giving in China while as in USA it is considered bribery. In addition, the religious beliefs of the majority in a country also influence its perception of business ethics. In India, for instance, it is unethical to eat beef; in Pakistan, it is abominable to eat pork. As such, companies must adhere to both the legal ethical requirements as well as societal ethical requirements to succeed in international markets. One major ethical difficulty is questionable payments. In many countries, especially in the East and in Africa, bribes and gift-giving are a social norm, especially for large value business deals. The Lockheed Corporation was locked in a devastating international corruption...
Words: 873 - Pages: 4
...Multinational corporations Table of contents Preface 4 1. Introduction; General meaning of MNC 4 2. Ranking multinationals 5 3. Entry of Multinational corporation into new markets, 6 4. Three Stages of Evolution 7 5. Motives for Foreign Direct Investment (FDI) 9 6. The comparison of MNC and TNC 11 7. What are the benefits and problems that MNCs face? 11 8. What are the Russian companies that achieve the multinational status? 13 Conclusion 14 Bibliography 14 Appendix 15 Preface We would like to consider the most interesting topic concerning the multinational corporations. If we called it like that, it means that company made a great success in the market, it operate in several foreign countries. In this mini-course work we will investigate more detailed the structure and strategies of MNCs. In the first part we will look through the history of MNCs. The history, in general, is to be considered as an essential part of every project in order everyone may compare the development of the particular sphere. Next part will show us the statistical data of MNCs, where we will recognize all the most reputable companies from the different industries, such as BMW, Nike, Lego, etc. We cannot leave a side the point of entry into the new market. There it will be explained the strategies of MNCs, such as mergering, joint venture and sequential market entries. Also we will consider investing into the particular companies, weather it is risky or not and the motives...
Words: 3800 - Pages: 16
...the world are based on different market conditions and different organizational structure. There are four kinds of structure which Starbucks uses to expand their stores around the world: own self-employed, joint venture, license agreement, authorized to operate. Moreover, they were the first firm which offered stock options to their part-time employees. Starbucks becomes a publicly traded company. (Starbucks Coffee Company, 2009) The Starbucks phenomenon continues in 2000s. Starbucks has more than 15,000 locations across the global. In addition to their excellent coffee and espresso drinks, people also can enjoy Frappuccino ice blended beverages. (Starbucks Coffee Company, 2009) Starbucks in Taiwan President Starbucks Coffee Corporation was established on January 1, 1998 in Taiwan. The United...
Words: 2999 - Pages: 12
...Images It takes more than localizing your customer-facing business to win in emerging markets. by Nirmalya Kumar and Phanish Puranam 2 Harvard Business Review October 2011 wo summers ago, Frits van Paasschen, the CEO of Starwood Hotels, was talking to his wife, Laura, about China. With 70 properties in operation there and 80 more being built, the People’s Republic had just become Starwood’s second-largest market, after the United States. Van Paasschen jokingly said, “It’s almost like we should move our headquarters there.” Laura’s response, in a nutshell: Perhaps you should. A year later, van Paasschen did just that—for a month. From June 8 to July 11, 2011, Starwood’s eight-member top management team worked out of Shanghai, doing business 12 hours ahead of, rather than behind, the company’s official White Plains, New York, headquarters. Starwood now plans to shift its base for a month every year to fast-growing markets such as Brazil, Dubai, and India. The end result of these relocations remains unclear: They may prove to be symbolic, they could be learning moments, or they might portend a permanent move of Starwood’s headquarters. Today they epitomize the mounting pressures on multinational companies’ organizational structures. As emerging markets grew explosively in the first decade of the 21st century, multi ationals raced to develop new stratn egies. However, changes in their organizational structures have been slow to follow, and people...
Words: 4260 - Pages: 18
...Strategy Final Exam Professor Robles Jin Won Jeong Dec 12, 2014 1. Regional Strategy: According to the readings for session #1, a very few multinationals are truly global. a. What are the bases for the claim that most multinationals are regional? The primary bases for the claim that most multinationals are regional are first the extraction of revenue by many “global” multinationals is confined to a region as opposed to the entire world, and second the similar market environment within certain region makes regionalization much more practical than globalization. First, Revenue generation in terms of geographic location is limited to specific regions or area, oftentimes geographically proximate regions. Rugman’s research uses the term home country to refer to the phenomenon that the home country diamond among countries in the same region is more similar to one another than the diamonds between a country in home country region and foreign country region. Therefore, adjacent markets are more likely to be similar to one another in in terms of business environment than home and foreign markets. More specifically, referring to the table 1 in the Rugman’s research, amongst fortune 500 firms, many have much higher intra-regional sales than foreign sales. This means that truly global, having penetrated the global market, multinationals are not common. Second, similar market environment within certain regions makes the exchange of products and services take place within a region...
Words: 3158 - Pages: 13
...standardized marketing on a global scale by relating it to multinational corporations alike. Using Hofstede’s Culture theory, it will also discuss whether our cultures of the world are becoming similar, or are we seeing a direct reflection of clever marketing. What standardization (and adaption) could be considered to be: the offering of identical product lines at identical prices through identical distribution systems supported by identical promotional programs in several different countries. (Buzzell, 1968 p 103) Although IKEA practice a standardized marketing strategy in some aspects of the marketing mix such as product, price and place they are certainly not entirely standardized when it comes to their promotion strategy, this is evident when looking at the move into China where they were forced to adapt to Chinese cultural differences. IKEA’s target market has always been ‘everyone’ in other countries however the target market was extremely different in China, the main target is women as they are considered the decision makers and were born in the ‘one child policy’ generation. This group was identified as being impulsive, easy to influence and committed to leading foreign consumer brands (Johannson 2009 p. 44). Due to the costs and distances in china, IKEA makes little use of catalogues, which is so central to their marketing elsewhere. IKEA china also offers home assistance in assembling furniture, this represents Chinas anti DIY (do it yourself) culture (Johannson 2009 p...
Words: 1361 - Pages: 6
...Economic impact of industrial pollution in China Outline I. Introduction Brief overview why China is the target country II. Overview of the problem a. Large population are suffering from the pollution b. Industrial growth based on coal uses; serious air pollution in most cities in China III. Economic effects c. Reduction of the labor force: high death rate to workers due to the pollution, especially air pollution; high risk for children to grow up in such environment. d. Fewer foreign investments: Foreign companies’ policy or culture require good environment for their employee; high rate of employee turnover because of pollution IV. Possible solutions e. Solution 1: Increased oversight on industrial operations f. Solution 2: Restrictions on development of new industries g. Solution 3: Use of change leadership to overhaul current policies tax subsidy/ mandates /cap and trade invest in new technology V. Conclusion/Recommendation The Chinese government needs to create new laws, borrow a leaf from The Sarbanes-Oxley Act. Introduction In an economically competitive world, most countries around the globe constantly compete to attain the top position in the international market in order to reap the benefits that come with such progress. For this reason, most countries insist on industrialization with some showing more zeal as compared to others through political policies...
Words: 3813 - Pages: 16
............................ 8 2.2 Elements of the Supply Chain......................................................................... 9 2.3 Three levels of Supply Chain Management.....................................................11 2.4 Supply Chain Management Technology…….................................................. 13 III. The supply chain solution for Multinational giant Retailers in China................. 13 3.1 Wal-Mart’s development in China............................................................. 14 3.1.1 When Wal-Mart first came into China............................................. 14 3.1.2 Challenges Wal-Mart met in China.................................................. 17 3.1.3 Wal-Mart’s supply chain solution in China....................................... 17 3.3 Carrefour’s development in China ............................................................. 17 3.2.1 Introduction of Carrefour ............................................................ 19 3.2.2 Learn from Taiwan’s experience entering into China....................... 19 3.2.3 Supply chain...
Words: 5290 - Pages: 22
...Document Type CPI Primary Subject CPI Secondary Subject Geographic Terms How Local Companies Keep Multinationals at Bay Harvard Business Review Online Bhattacharya, Arindam K. Michael, David C. NA Harvard Business Review, March 2008 NA Article Economics International Trade; ; ; Malaysia; Others Abstract To win in the world’s fastest-growing markets, transnational giants have to compete with increasingly sophisticated homegrown champions. It isn’t easy. Centre for Policy Initiatives (CPI) Pusat Initiatif Polisi http://www.cpiasia.org How Local Companies Keep Multinationals at Bay http://harvardbusinessonline.hbsp.harvard.edu.neptune.wou.edu.my/hb... ADVERTISEMENT Arindam K. Bhattacharya (bhattacharya.arindam@bcg.com) is a Delhi-based partner and managing director, and David C. Michael (michael.david@bcg.com) is a Beijing-based senior partner and managing director, of the Boston Consulting Group. FEATURE How Local Companies Keep Multinationals at Bay To win in the world’s fastest-growing markets, transnational giants have to compete with increasingly sophisticated homegrown champions. It isn’t easy. by Arindam K. Bhattacharya and David C. Michael Since the late 1970s, governments on every continent have allowed the winds of global competition to blow through their economies. As policy makers have lowered tariff barriers and permitted foreign investments, multinational companies have rushed into those countries. U.S., European, and Japanese giants, it initially...
Words: 6681 - Pages: 27
...Identify a global organization with a multinational presence. *Nike Identify and research a cultural issue that affects this organization's interactions outside the United States. Define the issue and provide an overview of how became an issue in the organization. Prepare an analysis of the ethical and social responsibility issues your organization must deal with as a result of being global. Write a 1,050- to 1,400-word paper summarizing the results of the analysis. Include the following: • Identify ethical perspectives in the global organization. • Compare these perspectives across cultures involved in the organization. • Describe a viable solution for this issue that could be acceptable by all stakeholders. Introduction: The Nike Corporation In today’s economy, there are several corporation that use multinational tactics in order to make their business strive and successful. A great benefit of multinational corporations is that it helps create wealth and jobs around the world. These corporations also offer much needed foreign currency for developing economies. However, there are many disadvantages such as multinational companies have monopoly power which enables them to make excess profit and pushing local shops off the map. A global multinational company that is very recognized and popular around the world is The Nike Corporation. The Nike Corporation was originally known as Blue Ribbon Sports (BRS). It was founded in January 1964 by Philip Knight...
Words: 1131 - Pages: 5
...say that it is a great challenge for all multinational corporations, especially for those just entering a market without experience. Whether it is an individual or a team can't avoid culture shock when they want to go abroad. For instance, I can't bargain when I want to buy a laptop in PC world due to language, let alone when I would like to sell goods. Whereas if a firm can learn and embrace target market's culture well, it will be able to understand the needs of those consumers deeply. This is not a short time to achieve the goal, managers need to show patience, initiative, sensitivity. The first method is to employ local people, the locals understand local consumption habits, festivals, religion, social system better than foreigners. So it is something we all take for granted: the locals can manage locals easier or build local ties better. In addition: Cultural exchange is a two-way process, after local employees working with foreign staffs, the locals can give suggestion to help foreign staffs to adapt faster. For example: There are two telecommunications companies want to expand business in U.S.. One is from India,another is from China.Indian company's U.S. division has been fully localized, senior staffs are almost all Americans, it has been deemed to come from behind global competitors after U.S. local telecommunications giant's did a strategic analysis. On the contrary, Chinese state-owned enterprise, all the senior staffs are sent from China. In addition to considering...
Words: 2314 - Pages: 10
...the behaviour of Carrefour in and outside China in terms of CSR - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Table of contents - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Executive summary I. Chapter – Introduction 1. Purpose of the Study 2. Objective of the study 3. The setup of the study II. Chapter – Carrefour’s position in China 2.1 Chinas retail market at a glance 2.2 Carrefour’s role in China III. Chapter – The purpose of CSR for multinational companies 3.1 The definition of CSR 3.2 The growing importance of CSR in China 3.3 The importance of Human Rights 3.4 Human Rights in China 3.5 Carrefour’s general employment practice standards 3.6 Carrefour Europe vs. Carrefour China 3.7 Conclusion VI. Chapter – Environmental concerns and CSR 4.1 Environment 4.2 Environmental Problems in China 4.3 Carrefour Europe vs. Carrefour China V. Chapter – Food Safety problematic and CSR 5.1 Food Safety 5.2 International Food Standards and Initiatives 5.3 Food Safety in China 5.4 Carrefour Europe vs. Carrefour China Literature Internet - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Executive summary China is one of the countries where globalisation has led to a significant change of the economical as well as the social frameworks. Multinational corporations are expending in a very dynamic way in order...
Words: 8802 - Pages: 36
