Midterm Question #1

Midterm Question #1

MNC's are complex organizations however, they dominate the worldwide market. Knowing the background and nature of MNC's, answer the following:

1. Identify the benefits and disadvantages of MNC's.

Ans.

With the realization that multinational corporations create such a mixed bag of pros and cons for developing nations, there is a clear impetus to examine what has been written about the advantages and disadvantages of these institutions. To this end, this investigation considers what benefits and problems are engendered when multinational corporations establish themselves in developing nations. Through a careful consideration of the benefits and drawbacks of these institutions, it will be possible to identify critical businesses standards that should be used by these organizations. Further, by examining the advantages and disadvantages of multinational corporations, recommendations for what role the American government should play in policing these organizations will be identified.

http://www.associatedcontent.com/article/1062818/multinational_corporations_benefits.html?cat=55

Mark Ian Menorias

2. Identify one MNC company and describe its operation.

Ans.

Pepsi wants to terminate its business with Sichuan Pepsi-Cola Beverages Company Limited, its bottler in the populous southwestern province of China. It demands the joint venture stop using its brand name and stop producing the drink, after eight years of cooperation.

The multinational accuses its Chinese partner of financial irregularities and keeping Pepsi out of the management. Chu Wah Hui, president of PepsiCo Investment (China) Ltd, says his company has tried to solve the dispute; arbitration is the last resort. “Sichuan Pepsi has breached the terms of the contract many times. It has been a trouble maker, not only for us, but for other Pepsi bottlers,” he says.

In a rebuttal letter, Sichuan Pepsi threatens to report “all the illegal activities” of Pepsi to the State Council (cabinet) and the National People’s Congress (parliament) and says Pepsi should be punished for “damaging the national interests of China”. It also plans to sue Pepsi for stealing its “commercial secrets” and violating the privacy of its employees, according to Beijing Yuobang Law Firm, which represents the Sichuan firm.

http://www.fdimagazine.com/news/fullstory.php/aid/46/Pepsi_was_one_of_the_earliest_multinational_companiesChina.html

Mark Ian Menorias

3. Describe how the parent control/coordinates with its subsidiaries in other countries or region.

Ans.

Globalization is the worldwide trend of businesses expanding beyond their domestic boundaries.
Multinational management is the formulation of strategies and the design of management systems that successfully take advantage of international opportunities and respond to international threats.

http://www.blogger.com/post-edit.g?blogID=7729347561952437041&postID=7458622594326972263

Mark Ian Menorias

4. How is IT maximized or used by this MNC?

Ans.

MNC is a parent company that engages in foreign production through its affiliates located in several countries, exercises direct control over the policies of its affiliates,
implements business strategies in production, marketing, finance and staffing that transcend national boundaries. In other words, MNCs exhibit no loyalty to the country in which they are incorporated.

http://www.econ.iastate.edu/classes/econ355/choi/mul.htm

Mark Ian Menorias

5. What were the weaknesses/problems encountered by this MNC from its environment and global setup?

Ans.

In more recent times, multinational corporations have grown in power and visibility, but have come to be viewed more ambivalently by both governments and consumers worldwide. Indeed, multinationals today are viewed with increased suspicion given their perceived lack of concern for the economic well-being of particular geographic regions and the public impression that multinationals are gaining power in relation to national government agencies, international trade federations and organizations, and local, national, and international labor organizations.

http://www.referenceforbusiness.com/management/Mar-No/Multinational-Corporations.html

Mark Ian Menorias