Kogut and Zander's Theory of Evolutionary Theory Versus Internationalization Theory

It also requires more of an investment and commitment by the international company which creates a higher risk. There is also the down side of having difficulty managing local resources.

The OLI theory refers to ownership, location, and internationalization (Dunning, 2000). It is a basic theory proposed by John Dunning in an attempt to explain the incentives behind the MNEs going overseas (Dunning, 1993), organizational forms of MNEs, the MNE’s location choices, and the decision choice that lay between FDI and its alternatives like international licensing, trade and outsourcing (Javorick, 2004). The Ownership advantage is how a firm’s tangible and intangible assets are used in overcoming extra costs of doing business in the global market and explain why a home-grown country firm as opposed to a foreign firm manufactures in a foreign country. Location advantage offers explanation to why a home-based MNE may choose to manufacture in a foreign country instead of home country (Helpman et al., 2004). Lastly, internationalization advantage is attributed to why a home-based MNE may choose FDI instead of licensing to gain production in a foreign country (Athreye and Chen, 2009).

With every market-entry strategy there are always going pros and cons. First, with exporting, varies companies, from small to

When a company relies on a production facility that is not local to their home land, they lose the majority of the control of their operations. Many of the developing countries that are chosen to outsource are underdeveloped which comes with a great deal of instability. When a country is not developed, although labor costs are low, the education level, physical and

Administrative costs of foreign sourcing include identification, qualification, program development, travel, broker fees and others that are not directly involved with the product. Some of these costs are common to both the domestic and international aspects of sourcing.

There are so many ways to evaluate the role of TNCs, and how they shape and contribute to the economy. Before all this one must understand what globalization is and why it is very important to TNCs. Globalization is simply the integration of culture, trade, natural resources and factors of production between nations. But, economic globalization refers to increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology and capital (Shangquan, 2000). The main key players are transnational corporations (TNC) sometimes known as multinational corporations (MNC).TNC’s are firms that have attained the power needed to co-ordinate and operate across the boundaries of many nations. Usually the main purpose of TNCs is to maximize profit and increase their selling market. This is why many TNCs are interested in globalization because without an effective and free trade global economy, many (if not all) will not be able to function and be successful. Some economist feel differently about how TNC’s

International business is a term used to collectively describe all commercial transactions that take place between two or more nations. A multinational enterprise (MNE) is a company that has a worldwide approach to markets and production or one with operations in more than a country.

When a company decides that it is time for it to grow from a national into a multinational company (MNC) there are cost and benefits involved. A multinational corporation is a company that has productive assets, which they own and control in countries other than their own. An MNC is unlike an enterprise, which exports products and services, but the MNC directly invests into developing countries, where it can benefit from producing products at a lower cost, while increasing its market share. Whether this has a positive or a negative impact for the company and its host state, is dependent on the

Over the years, Multinational enterprise have matured and developed into large companies that they are now part of our everyday lives. Form the use of mobile phones to the cars, personal computers and their software and even the beverage we drink, most of these products are supplied by Multinational companies. Their existence has great impact on our lives. In the world today, Multinational enterprises are powerful companies and they own resources in excess that most host countries possess. These companies are so powerful that they turn out to be power centers that can manipulate the host countries and even international organizations and at times the affairs in its home country.

Multinational companies have brought revolution in the world. Their role is very significant in our lives. The multinational corporation is defined as an association or organization which provides its services to not only to one country but to many countries of the

Other challenges to MNCs do exist in addition to those deriving from trade barriers. Wu (2008) gives insight to the situation faced by multinationals in China. According to Wu, multinationals in China have serious problems on two fronts, firstly

The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly,

Due to the globalisation is developing rapidly worldwide, doing business effectively is the best way to ensure the economic’s growth as well as to gain more reputation for the organisation. In global expansion strategy, a multinational corporation (MNC) is considered as the most powerful acceleration for administrators. Acknowledging the advantages of MNC, many businesses started to invest in developing countries to target the cost-benefits and broaden their scope of activities. This leads to the unexpected rise of MNC in recent years. However, managing a multinational corporation in another country is not a simple issue because the world is changing day by day and the success of each firm is based on both internal and

A Multinational corporation is a corporation that does business in two or more countries. It has its home base in its own country, but has branches or subsidiaries in other countries. Their home base is the company’s identity. For example Toyota is Japanese even though it operates in the United States. With modern technology and improvement in communications, transportation and infrastructure, corporations are venturing beyond national boundaries in the pursuit of business opportunities. Their size provides them the opportunity to achieve markets and increase their scale in manufacturing and development outside their local market. In other words, multinational companies are going global. Globalization refers to the unification of world

Rivals already in the market , therefore they should enter otherwise the competitor will acquire all the potential customers within that market.