By students, for students.

ISM crash course: the multinational enterprise

In Management, Marketing on January 17, 2013 at 7:20 pm


SonyMusicLogo

A multinational enterprise (MNE) operates in more than one country and normally consists of firms united by ownership, a resource pool and strategic vision. Corporations achieve MNE status through an internationalisation process which sees the firm make increasingly greater commitments to foreign markets. Typically businesses go through these steps, feeling out market conditions until certainty of sustained profitability outweighs the risk of failure:

Internationalisation flow

Internationalisation can enhance competiveness by providing more customers, expertise and scale advantages, as well as overcoming tariff barriers and reducing dependence on domestic markets.

Successful multinationals have identified their goals and implemented plans based on the analysis of their internal and external environments. Ideally, strategy builds on the internalised assets (firm specific advantages or FSAs) and natural factor endowments (country specific advantages or CSAs) of a corporation.

CSAFSAmatrix

Example

Sony

Sony, the electronics and entertainment multinational, has successfully leveraged CSAs in the placement of its operations. Sony’s electronics are produced in Japan, capitalising on the nation’s sophisticated and technology-hungry consumers, advanced development capabilities, suitable IP protection and high concentration of educated human resources. Additionally, Sony makes use of the United States’ competitive factors by headquartering its music and entertainment arm in America. The US’s diverse and large domestic market creates a high demand for entertainment that both appeals across subcultures and targets niche tastes. Both countries possess characteristics that make them world centres of export in their specialist trade.

However, the conflicting interests of operating companies can damage competitiveness. Some commentators interpret Sony’s lack of activities surrounding digital music electronics as due to the influence of Sony music label executives who fear increased piracy of their music.

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  1. I believe matrix labelling is incorrect for the FSA/CSA and also EI/NR above
    Top axis is Left is Q1
    Top axis right is Q3
    Bottom left is Q2
    Bottom right is Q4
    Many thanks for this though great work.

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