Past and Perspective

the growing economic interdependence of countries worldwide through increasing volume and variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and widespread diffusion of technology - IMF

All institutions have to make global competitiveness a strategic goal. No institutions, whether a business, a university or a hospital, can hope to survive, let alone to succeed unless, it measures up to the standards set by the leaders in its field, any place in the world - Peter Drucker

International trade
Financial flows Communication Technological advances Population (Labor) mobility

A guarantee of fiscal discipline and curb on budget deficit

A reduction in the public expenditure

Tax reforms Financial liberalization

Competitive exchange rates

Trade liberalization Promotion of foreign direct investment

Privatization of State enterprises

Deregulation of economy Protection of property rights
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Doing or planning to expand business globally

Global outlook of the business Global business dynamics (Locating production facilities) Product planning and development on global market Considerations

Global sourcing of factors of production

Global orientation of organizational structure and management culture

Corporate objectives

External Constraints
Geographic Regulatory Size of market

Internal Constraints Organizational Design

Market share Manpower Capital needs

Management Style
Ethnocentric Polycentric Geocentric

World level globalization

Country level globalization Industry level globalization Firm level globalization Globalization of Individuals

Trade measures
Foreign investment measures ECB measures Currency convertibility

Competition and Learning International economic problems and crises Technological gains Industrial and employment restructuring Larger markets Lesser control over domestic economy Outsourcing and subcontracting advantage Readymade technology Greater specialization Price stabilization International investments

Drain of basic raw materials Consumerism Shift in the pattern of industrialization

International economic co- Erosion of domestic operation production base

the essential nature of the multinational enterprises lies in the fact that its managerial headquarter are located in one country (home country) while the enterprise carries out operations in a number of other countries (host countries) as well.
a corporation that controls production facilities in more than one country, such facilities having been acquired through the process of foreign direct investment. Firms that participate in international business, how large they may be, solely by exporting or by licensing technology are not multinational enterprises.
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70,000 MNCs with 9,50,950 affiliates

Only about 12 per cent of these affiliates are in the developed countries The top 100 TNCs are the principal drivers of international production

Their foreign affiliates employ about 6 million people with foreign sales of about $2trillion
Concentrated on electronics and electrical, automobiles, petroleum, chemicals and pharmaceuticals. increasing number of Japan and European MNCs Japan has the largest number, i.e., 10 in the top 20 MNCs MNCs are growing from developing countries too. South Korea has MNCs like Samsung, LG, Hyundai.

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Why do companies go global?

Money in the overseas markets Rapid shrinking of time and distance Domestic markets are no longer adequate and rich Raymond Vernon theory

Petroleum and mining companies go global very often

Nationality of the company affect the decision of going global

To save high transportation cost

Try to remain nearer to sources of raw material and labor Motivation to go global for high-tech companies
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Manifestation to go global
Configuration anywhere in the world Interlinked and independent economies Lowering of trade and tariff barriers Effect on related industries and ancillaries Infrastructural resources and input at international prices Increasing trend towards privatization Entrepreneur and his unit enjoy a central economic role

Mobility of skilled resources

Market-side efficiency Formation of regional blocks
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Transfer of technology, capital and entrepreneurship Improvement in the balance of payment Creation of local jobs and career opportunities Competition and better utilization available resources

Greater availability of products and services to local people

High quality managerial talent Step towards world economy

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Acquisition of Raw material and other resources

Acquisition of technologies and management expertise form other markets

Export of product to other markets

Inflow of the income from overseas profits

Better job opportunities in the home countries.

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Host country may loose its economic sovereignty MNCS objectives may be guided by world wide trend and developments Problem of balance of payment Acquisition of local business Exploitation of local labor Sudden exit from local markets (FIIs) Cultural issues

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Whether to go global? Which market to enter? Deciding the mode of entry

Learning to handle differences

Adjusting to the management process Selecting a managerial approach Deciding an organization structure

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Thanks to economic reforms, Indian businessmen are now compelled to come out of their shell and see beyond the physical boundaries of the country. From now onwards our captains of industries must think and act, both actions being guided by international perspective

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A large market

A strong legal system

Well developed capital markets A class of private sector partners English speaking human resources Democratic setup Booming economy Huge skilled manpower Opportunities to diversify portfolio risks
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