How One Can Apply Key International Business Theories In Multinational Corporations (Essay Sample)

How One Can Apply Key International Business Theories In Multinational Corporations (Mncs).
Name:
Institution:
Abstract
The paper focuses on international business evaluation with an aim of showing how one can apply international business theories in multinational corporations. The paper also defines clearly the meaning of multinational corporations. The company in assessment is the Walmart Company and its operations in the emerging nations. The paper asses operation of Walmart Company in Brazil. There are three main business theory linked to the analysis. The first business theory is the Uppsala model theory, which illustrates ways through which firms strengthen their business operation and find out ways to survive and survive under competition in foreign markets. The second theory is the eclectic paradigm, which develops from internalization theory. The last theory in view is the diamond model, formulated by a theorist known as Michael Porter. The theory shows how businesses compete other related firms in certain localities. The paper also views on the company’s foreign entry strategies. The last part of the paper talks about international business impacts and contributions the business makes from its operations.
Key Words: multinational corporations, Uppsala, Walmart, eclectic paradigm, diamond model
An International Business Analysis
Introduction
Internationalization is quite a complicated procedure in the business world. The term applies in the branch of economics where the term refers to the techniques a firm uses to advance its operations in the international market. However, there is no definite definition of the term internationalization, as there are quite a good number of theories in relation to internationalization and they quite differ in definition of tis term. Most of these theories explain why international activities exist in the business context. Multinational corporations are key in the complex internalization process. The term refers to an institution, which takes control of the production activities in another country or in a multiple of foreign countries instead of its home country. There is significance in partaking in internationalization process as it plays a key role to ensure that the business could perform well in foreign countries. Other than helping the business cope with competition, most if the businesses stabilize after the internationalization process is successful and realize good profits. There are three main theories that helps one to understand internationalization and multinational corporations in the part of the home country evaluation. The theories are the Uppsala Model, the eclectic paradigm and the diamond theory. Before a firm make an entry to a foreign market, it should make stable strategies about the market. To add on, there are several influences and contributions from the international business operations. The paper focuses on evaluation of the Walmart Company and its operations in emerging countries, internalization process, multinational corporations’ concepts, a business’s strategies in relation to foreign market entry and the effects, and influences of international businesses.
The Analysis of your Multinational Corporation (MNC)
The focus of this section is the analysis of Walmart’s Multinational Corporation. To start with, Walmart is a renowned company in a global context. The firm offers a variety of services from its stalls. The company has established its operations in countries such as Brazil, Argentina, United States of America, Japan, Canada and Mexico. Walmart has an approximation of 6500 worldwide operational offices. In the year 2004, the company acquired 118 stores in Brazil (Sullivan, 2010, 326). Buying of those offices in Brazil was a bold move for the company as it was significant in realizing more profit and helped the firm generate more revenue. Economically, businesses, firms and other organizations have experienced globalization. Globalization has played a key role in helping the firms penetrate the international market and expand the operations in the country it penetrates. The above aspects have led to the worldwide advancements of most businesses. The trend is important as it ensures that the firms carrying out Multinational Corporation provide better services and sell good quality commodities to the consumers, as a firm that operates in a global context has to maintain a good image always.
Walmart Company has made significant moves in relation to Multinational Corporation. The firm’s original country is America. However, the firm has global enterprises in most of the countries and offers its goods and services to consumers in several countries around the world. One of the countries is Brazil, where it the company has opened over 100 stalls and supermarkets to sell the goods and offer services to consumers all around (Sullivan, 2010, 332). The company has good strategies that enable it penetrate and invest in foreign countries. One of the main strategies that it makes concerns obtaining buying and selling licences in the foreign countries it makes entries. Firm should have techniques on the way it should get buying and selling licence in any of the country it deems profitable.
Host Country Analysis
The main factor that facilitates internationalization in Brazil is political stability. The country has a stable government that governs the people. Political stability is a key factor that investors consider before investing in a country. To expound on this, countries prone to warfare, violence and destruction of property cannot support investments. The reason behind this is that during times of violence and war, there is massive destruction of property. The property might include an individual’s property he or she had used to put up a firm. Destruction of property and business losses amounts to huge losses incurred by the investor. In addition, consumers are not at peace to consume a firm’s products well (Zamberi, 2012, 60). In addition, political instability contributes to less sales. Brazil also has favourable government policies. On the other hand, the country’s policies are not very complicated in acquiring of licences to penetrate the market and invests. That facilitates internationalization and multinational corporations to enter the country. There are theories linked to the internationalization process applied in most of the firms. In this section, the paper discusses three of the theories, which include in the Eclectic paradigm, Uppsala Internationalisation theory, and Porter’s diamond theory.
* Uppsala Internationalisation Theory
The theory is quite comparable to the POM theory. The theory expounds on the way firms strengthen their operations upon their entry in new markets. The model starts by explaining the way firms gain borrow the expertise they had from their home market prior to entering the new markets. The expertise borrowed mostly bases on the cultural practices of the people in the area where the firm carried out its original operations. They advancements made start from grass root operations where firms start with traditional commodities, as they make progressions to more complex commodities and services to their consumers. The advancement to intensified services require intense means of operating the business.
The theory links its argument to the above analogy. Theorists ague out that investments in foreign country start with infrequent exports, then eventually advances to frequent exports. In addition, from such simple activities such as infrequent exports, one gains more knowledge and speculates on foreign investment. The knowledge enables one to expansion of business operations. Finally, from little concepts of expansion and gradual growth, business get into the trends of internationalization and multinational corporations experience around the globe currently.
* Eclectic paradigm
The Eclectic paradigm theory is an economic theory that explains internationalization. The theory is also called the OLI-model theory or OLI-framework theory, with John Dunning being the founder. The theory states that all the transactions of an organization in the free market. The theory has three sections. Firstly, dunning talks about advantages to the proprietor. He states that in areas where there is competition in investments, there are higher chances to start foreign production. Secondly, he talks about locality merits. The theorist uses locality to refer to regions one could invest (Tiedtke, 2012, 150). In addition, the locality aspect helps a firm to participate in foreign direct investment (FDI). The last part of the theory is where the theorist talks about internalization benefits. In this section, he talks about the way firms view crossing the borders to know get more market for the product even in foreign states. Through the foreign production, there is foreign entry leading to internationalization process. The three parts of the theory combined explains the trend of internalization.
* Porter’s diamond theory
The Porter’s diamond model explains the trend of internalization quite clearly. The theorist, Michael Porter expounds the reasons as to why some industries become very competitive in certain locations. Other scholars used the theory as a framework basis of the works to attempt explain the trend of internationalization. The model has two sections (Rienda,2013,120). The first section talks about collections of firms that have had success in their operations, which exist in ten significant trading nations. Historically, competition formulates a competitive business environment where aspects of competitive advantage exist.
The second section analyses t...