Following are the cases that i have faced in my exam, you can go through it for your practice. If you need any help or assistance please reach me on sk1242@hotmail.com
CASE NO. 2
Two Senior executives of world’s largest firms with extensive holdings outside the home country speak.
Company A : “We are a multinational firm. We distribute our products in about 100 countries. We
manufacture in over 17 countries and do research and development in three countries. We look at all new
investment projects both domestic and overseas using exactly the same criteria”. The execution from company A continues, “ of course the most of the key ports in our subsidiaries are held by home country nationals. Whenever replacements for these men are sought, it is the practice, if not the policy, to look next to you at the lead office and pick some one (usually a home country national) you know and trust”.
Company B : “ We are multinational firm. Our product division executives have worldwide profit
responsibility. As our organisational chart shows, the united states is just one region on a par with Europe,
Latin America, Africa etc, in each division”.
The executive from Company B goes on to explain, “the worldwide Product division concept is rather difficult to implement. The senior executives in charge of this divisions have little overseas experience. They have been promoted from domestic ports and tend to view foreign consumers needs as really basically the same as ours. Also, product division executives tend to focus on domestic market, because it generates more revenue than foreign market. The rewards are for global performance, but strategy is to focus on domestic. Most of the senior executives simply do not understand what happens overseas and really do not trust foreign executives, even those in key portions?
Questions :
1 Which company is truly Multinational ? Why?
2 List three differences between Company , Multi National company and Trans Multi National Company ?
CASE – 3 (Strategic R & D by TNCs in Developing Countries)
TNCs have had long units in developing host countries for adopting products and processes to the local
conditions, and in a few cases, to products for local markets. Since the min-1980s, however, they have also started locating strategic R & D centres in some developing countries, for developing generic technologies and products for regional or global markets. The main incentives for this are : (a) access to highly qualified scientists as shortages of research personnel emerge in certain fields in industrialised countries, (b) Cost differentials in research salaries between developing and industrialised countries, and (c) rationalisation of operations, assigning particular affiliates the responsibility for developing, manufacturing, and marketing particular products worldwide. Th new trends are more visible in industries dealing with new technologies, such as microelectronics, biotechnology, and new materials. In these technologies, the location of R & D can be geographically de-linked more easily from the location of manufacturing. It is also possible to separate R & D in core activities from that in non-core activities. Consequently, countries like India, Israel, Singapore, Malaysia or Brazil serve TNCs as good locations for strategic R & D. For instance, Sony Corporation of Japan has around nine R & D units in Asian developing countries. It has three units in Singapore conducting R & D on core components such as optical data shortage devices, integrated chip design for audio products and CD-ROM drives, and multimedia and microchip software. It has three units in Malaysia working on video design, derivative models and circuit blocks for new TV chases, radio cassettes, discman and hi-fi receiver designs. It has one unit in Republic of Korea focusing on the design of compact discs, radio cassettes, tape recorders, and car stereos. It has one in Taiwan designing and developing video tape-recorders, minidisk players, video CDs, and duplicator. Finally, it has one unit in Indonesia focusing on the design of audio products.
Such units often work in collaboration with science and technology institutes in the host country. For instance, Daimler Benz has established such a unit in Bangalore, India, in collaboration with the Indian Institute of Science to work on projects related to its vehicles and avionics business. Current work includes interface design of avionics landing systems and smart GPS sensors for use by the group’s business worldwide. Source: World Investment Report 1999.
Questions:
(a) Explain why MNCs have located R & D centres in developing countries?
(b) Mention the areas where R & D activities can easily be decentralised.
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