Evaluate one of the basic benefits of becoming multinational corporations. Your textbook reading this week sets out the different reasons firms cite when explaining why they cross the borders of their home country and become multinational corporations. Read the three basic benefits highlighted in the text and in Figure 8-1.
Select one of the reasons (or benefits) and defend why it might be emerging as the most important one in firms’ decisions to internationalize in the 21st Century. In answering this question, be sure to consider the international business conditions today and look for the motivations that underlie these current trends. In your answer, be sure to contrast the less important alternatives that you did not select. It will create a more lively discussion if participants don’t all select the same reason to defend as the most important, emergent reason or benefit. This section of your post should be 1 page (500 words) in length
Guide On Rating System
Vote
One of the basic benefits of becoming a multinational corporation (MNC) is the access to new markets. This benefit allows firms to expand their customer base and generate additional revenue from foreign markets.
In today's globalized economy, access to new markets has become increasingly important for firms looking to expand and grow. As technology advances and communication barriers continue to decrease, the world has become more interconnected, leading to an increase in global trade. This has created immense opportunities for MNCs to tap into international markets and reach customers that were previously inaccessible.
One reason why access to new markets is emerging as the most important benefit in firms' decisions to internationalize in the 21st Century is the saturation of domestic markets. Many firms have already captured a significant share of their home country markets, making it difficult to achieve substantial growth domestically. By expanding into foreign markets, firms can overcome this saturation and tap into new customer segments, leading to increased sales and profitability.
Furthermore, the rapid growth of emerging economies in regions such as Asia, Latin America, and Africa provides an attractive opportunity for firms. These markets offer high growth potential due to factors such as a rising middle class, increasing consumer purchasing power, and a favorable demographic profile. By establishing a presence in these emerging markets, firms can gain a competitive advantage and leverage the growth opportunities offered by these economies.
On the other hand, the other two basic benefits highlighted in the text and Figure 8-1 - access to resources and cost savings - are also important but relatively less significant in the 21st Century. While access to resources such as raw materials, labor, and technology has traditionally been a driving force behind internationalization, advancements in technology and global supply chain management have made it easier for firms to access resources from anywhere in the world. Thus, the significance of this benefit has diminished.
Similarly, while cost savings through factors such as economies of scale, lower labor costs, and tax incentives have been traditionally important drivers of internationalization, the focus has shifted towards quality, innovation, and differentiation in today's competitive business environment. Cost savings alone may not guarantee sustainable competitiveness, and firms need to prioritize other factors such as product differentiation and customer value creation to thrive in the global marketplace.
In conclusion, access to new markets is emerging as the most important benefit in firms' decisions to internationalize in the 21st Century. The saturation of domestic markets and the opportunities offered by rapidly growing emerging economies are key motivations for firms to expand globally. While access to resources and cost savings are still relevant, they have become relatively less important in today's globalized and highly competitive business landscape.
Got a question with my answer?
Cheapmath.com is completely free!
Asking question is free.
Getting answers is free.
+99