IB0012–Management of Multinational Corporations

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Master of Business Administration- MBA Semester 3

IB0012–Management of Multinational Corporations -4 Credits

(Book ID: B1200)

Assignment (60 marks)

Note: Assignment Set -1 must be written within 6-8 pages. Answer all questions.

Q1. Discuss the meaning of international business. What are the difficulties in it?

Answer. International business is a term used rarely to describe all commercial transactions (private and governmental, sales, investments, logistics, and transportation) that take place between two or more regions, countries and nations beyond their political boundary. Usually, private companies undertake such transactions for profit; governments undertake them for profit and for political reasons. It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc.

Q2. Describe the potential sources of disputes between MNC and host country governments.

Answer. Although the Multinational Corporations (MNCs) has no power over the host government, if may have considerable power under that government. By being able to influence certain factors, the MNC has the opportunity to help or harm national economics; in this sense, it may be said to have power against host governments. The strategic aspects of a host country’s national policy that are subject to the influence of the MNC include:

1. Planning and Direction of Industrial Growth

Host nations have viewed with concern the tendencies of many MNCs to centralize strategic decisions in their headquarters. For the host governments this signifies loss of control over industrial strategy to the foreign-based MNC. The MNCs allegiances are geocentric; their overall objectives are growth and profits globally rather than in the host economy.

Q3. Compare the salient features of Chinese and Indian Management Practices. 

Answer. It looks like we are moving toward a significant new quantification of management practice. When academics start tackling these issues, it tends to get taken beyond what is sufficient for consulting firms’ practice. The tool used in the studies for evaluating management practices combines 18 dimensions of management practice grouped into four areas: operations, monitoring, targets and incentives. As one might expect, the soft skills like communication, leadership and inspiration are missing, as they are harder to objectively assess.

Q4. Discuss the four variables of Porter’s theory. 

Answer. Michael Porter's famous Five Forces of Competitive Position model provides a simple perspective for assessing and analysing the competitive strength and position of a corporation or business organization. After his earlier work on corporate strategy Porter extended the application of his ideas and theories to international economies and the competitive positioning of nations, as featured in his later books. In fact in 1985 Porter was appointed to President Ronald Reagan's Commission on Industrial Competitiveness, which marked the widening of his perspective to national economies.

Q5. Explain the merits and demerits of Matrix and product division structures.

Answer. Organisational structure refers to the way that tasks and responsibilities are allocated to individuals and the ways that individuals are grouped together into offices, departments, and divisions.

Mangers often describe their organisation by drawing an organisation chart which shows the structure of an organisation and the relationships and relative ranks of its profits and positions.

When small businesses are started, they consist of an owner, manager and a few employees so an organisational structure is unnecessary at this stage. As an organisation grows to become an established business, it will adopt one of a number of organisational structures to implement its strategy.  There are a number of different structures (the allocation of tasks and responsibilities to individuals) an organisation can choose. They include a functional structure, multidivisional structure or a matrix structure.

Q6. Write short notes on

(a) make-or-buy decisions

Answer. The act of choosing between manufacturing a product in-house or purchasing it from an external supplier. In a make-or-buy decision, the two most important factors to consider are cost and availability of production capacity.

An enterprise may decide to purchase the product rather than producing it, if is cheaper to buy than make or if it does not have sufficient production capacity to produce it in-house. With the

(b) Just-in-time methods.

Answer. The "just-in-time method" is an inventory strategy where materials are only ordered and received as they are needed in the production process. The goal of this method is to reduce costs by saving money on overhead inventory expenses. The company must be able to accurately forecast demand for goods and services for the just-in-time method to be effective.

Method

The just-in-time inventory method is considered a "pull" approach in manufacturing. When sales activities warrant more production, inventory is "pulled" and more manufacturing supplies are

receipt of inventory materials, labour strikes or supply shortages -- before deciding if this inventory method is right for their organization.

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