Registration Number: H00124734
Course: INTERNATIONAL BUSINESS
Coursework type: ESSAY
Course Tutor: Dr.UmmeSalma
HOW CAN THE EMERGENCE OF MNCs BE BEST EXPLAINED?
Multi-National Corporations are corporations which have their head office in one country which is called the host country or the home country from where it manages their operations all over the world. Normally any corporation or group which derives the quarter of their income from their operations outside the host country is considered a multinational corporation. There are mainly four categories of Multi-National Corporations (1) a multinational, decentralized corporation with strong home country presence, (2) a global, centralized corporation that acquires cost advantages through centralized production wherever cheaper resources are available (3) an international company that builds on the parent corporation's technology or R&D (4) a transitional enterprise that combines the previous three approaches . As according to the UN data about 35000 companies have direct investment in foreign countries, and the largest 100 of them control about 40 percent of world trade. (Anon., 2012) The birth of MNC's started from the early days of transitional trade started by Mesopotamian, Phoenician and Greek merchants. As the result of fall of Roman Empire the trade among various nations became difficult. The feudalism in Middle East and Europe resulted in wars among feudal lords and church prohibited the trade with the Muslim nations. After years the trade was established by traders of Italy who are considered as the predecessors of present day Multi-National Corporations. In the mid of seventeenth and eighteenth century Multinational corporations in the form of trading companies started. The East India Company, the French Levant Company, the Hudson Bay Company, was the main multinational companies established in those days. Standard Oil, British Petroleum, International Nickel and Ana Conda Copper were the main MNCs investing mainly in petroleum and mining industries in the early twentieth century. The MNCs went through three main phases in their growth process. The first phase came to an end almost at the beginning of the 1st World War. The European Companies such as Imperial Tobacco, Dunlop, Siemens, Philips, etc. captured the field. Due to the recessionary situation prevailing world over during the post-war period amidst of 1930-1950 the growth of Multinational corporations came to a halt. During the first phase, decades of 1950s and 1960s witnessed the emergence of American MNCs such as IBM, General Motors, and Ford Motors. The 1970's witnessed the third phase of MNC's. The new age belonged to the German, Europeans and Japanese MNCs. The recent years witnessed the emergence of MNCS from developing countries such as Indonesia, India etc. (Nirav, 2012) Let us consider the case of Ford Motor Corporation over the years. The life cycle of this company will help us better understand the emergence of the MNCs Ford Motors is an American automotive corporation found by Henry Ford and a number of associates, who were C.H Bennett, Alexander Malcomson, James Couzens, John W. Anderson, John F. Dodge, Charles J. Woodall, Horace H. Rackham, Horace E. Dodge, Vernon C. Fry, John S. Gray and Albert Strelow started on June 1903. The company have produced automotive parts and heavy vehicles in the past. The Ford Motor company today produces luxury and commercial cars. (Anon., www.britannica.com) Ford introduced various methods which were later called as Fordism. These were the methods like assembly lines and management of high scale industrial work-force and methods for higher level of production of cars. Henry Ford was one most common symbol of transformation of...