Identify and discuss four challenges that face multinational organizations
Answers
Porter’s notes that ‘firms, not individual nations, compete in international markets’. How does this statement help to explain some of the major challenges facing MNE’s .How do the determinants of national competitive advantage help explain how companies can maintain their economic competitiveness?
Porter’s note that firms and not individual nations compete in the international market is a very valid statement that cannot be overemphasized. The involvement of nations in the international market is to weigh and justify their existence in terms of the total output of production from the nation. A nation with a high production rate will be rated high in terms of its GDP which is the market value of the total amount of goods and services made within the borders of that particular country in a calendar year. This makes nations to encourage firms to establish in their countries while they provide a conducive environment for such firms to operate. These firms are always beneficiary to the people of the nation by providing employment, goods and services, income to the government, etc.For example, Toyota is an automobile company in Japan, but its success internationally was achieved as a firm based or located in Japan, it’s not Japan as a country competing in the industry just that it offers a conducive environment for their operation. Same is the case of BMW and Mercedes Benz in Germany.
However, firms’ not individual nation competes in international market (Porter’s; Competitive Advantage of firm in Global industries) and thus faces various challenges to have a competitive advantage over other firms in the same industry. Some of the major challenges firms faces includes; economic weakness, cultural adaptation, price competition, terrorism, higher expense, environmental concern, change of government/regulation problems, health problems/hazard, government policies etc. The extent to which these problems affect firms could be based on the structure of the industry or on the positioning of a firm within the industry. In another hand, some challenges are encountered in an altered environment in foreign nations at the same time. The alteration in the system of the environments which could bring in the changes can be analysed and divided into various aspects using the PESTEL ANALYSIS; namely, political system, economic environment, social/cultural environment, technological advancement and legal environment issues. All the changed environments generate various challenges to multinational companies. In particular, challenges generated by changed cultural environment cannot be undermined because it could be seen as one of the most severe aspect of running a multinational business. (http://www.oppapers.com/essays/Discuss-Management-Problems-Facing-Multinational-Companies/120224)
MNE in various industries in nations faces different challenges. This could be explained with the Porters five competitive force where all these challenges are embodied.
Explanation: