Understanding the Global Environment
Must multinational companies go global to survive?
Student Number: 062831790
Date Due: 13/01/2010
This essay will look at examples of multinational companies and globalised companies and explore the pros and cons of being in their status’es in business. It will also look at the reasons multinational companies may go global and analyse wheather or not that is the best alternative for survival. The essay shall discuss whether going global for companies is good for the company when there might be other better options to consider. Multinational companies are companies with many branches in different countries. Global companies are recognised by the world and operate in all continents. When a company goes into a global market it opens its products to be sold at much higher levels as the people all over the world will see them. Thus creating higher profits because its expanded its product spread geogrpahically. It opens up into international markets which means the company will not solely be dependent on the local markets and because these markets are so diverse the company will be open to new marketing techniques and companies that are run in different ways with different approaches and open to new ideas.
Ford is a good example of a global company it holds around 15% of the market share to date according to AM-online sales figures. Ford started making cars in the United States and had soon expanded into England, Europe and Australia. With around ninety plants it was one of the most recognised car companies in the world. But according to recently published news in America, Ford is currently avoiding government bail-outs and bankruptcy as stated in an article in the Christian Science Monitor. Ford are relying on consumer perception of their company to improve by not taking government funding and the perception of their main rivals General Motors and Chyrsler who are rumoured to be close to bankruptcy to push customers over to Ford.
The history of Ford should be explained at this point in 1911 the first overseas assembly plant was built located in Manchester in England. Since then in the 1960’s Ford has moved in to the european market and has been known to the world. But although Ford has its products spread all over the world it still is jeopradised by bankuptcy.
But why did Ford go global? It moved into the United Kingdom in Manchester in 1911 exactly the same time it had won a bidding war against Chrysler for the Selden patent which was worth nothing. This is because the man called George Selden who applied to patent the ‘road engine’ centuries before did not patent the specifics of car engines completely and years later this was bought by Ford who soon realised it was worthless because of the specifications of it did not cover car engines built in the 1900s. By the 1960’s General Motors and Chrsyler had moved into Europe and Ford had done the same despite its loss of money in the bidding war.
Thus Ford needed to keep up with its competitors so it went into international markets all over the world. So was it a good idea for Ford to go global in the first place. Once a company has opened its products to the world its options to continue to compete with rivals is to expand or develop its product range and marketing tools. But could it be suggested that multinational companies could still survive without expanding into global markets but still expand their product range.
Because there are disadvantages when a company goes into global markets if is not coordinated effectively and processes to get to a global status prove ineffective then this can cost the company money. Global companies need the ability to respond quickly to changes to sometimes coincide with competition or legislation or consumer needs. If it is...