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Law Enforcement Analysis - Coursework Example

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The paper "Law Enforcement Analysis" is an impressive example of Business coursework. Globalization and multinational companies are two closely interrelated concepts whereby one causes the other. In order to understand multinational enterprises, it is worth first understand globalization. The latter is defined as a form of an international strategy whereby a company engages in cross-border transactions and hence engages in global competition…
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LAW “ENFORCEMENT” By Name Institution Instructor Course Class Date Introduction Globalisation and multinational companies are two closely interrelated concepts whereby one causes the other. In order to understand multinational enterprises, it is worth first understand globalisation. The latter is defined as a form of international strategy whereby a company engages in cross border transactions and hence engage in global competition (Singla 2009). It involves participation by a firm in the global market. Globalisation is the creation of multinational corporations (MNCs) while the latter fuels the former. In this context, globalisation is viewed as the effort towards creating a global market. Therefore, when MNCs continue to enter emerging markets, they open them up to the global market, which results in the creation of a single, global market. There are diverse reasons why businesses venture into emerging markets. They may be in search for low cost of production especially labor or they could be after exploiting market opportunities in these emerging markets. Firms also engage in multinational business in the effort to set up new operations near the source of raw materials or near the end market. Whichever the reason, it is clear that the primary driver of MNCs is profit maximisation. In their quest to grow their revenues, they also offer benefits to the foreign countries where they enter. Some of the notable advantages include employment creation (directly and indirectly), increased inflow of foreign investment, introduction of new and advanced technology, introduction of new products and services, and increased government revenue through payment of taxes and duties (Singla 2009). Other advantages include introduction of new management techniques and systems, increasing the quality level of products and services, and ending monopolisation by local firms, which forces prices down through enhanced competition at the local level (Singla 2009). However, MNCs serve as the greatest competition threat to local and especially small businesses. If not checked, they may introduce unhealthy competition due to their scale economies thus forcing small, local businesses out of the market. In addition, MNCs may offer a blind eye to the country’s resources and systems. Consequently, when there are weak regulatory frameworks in emerging markets, MNCs may act irresponsibly leading to resource exploitation leaving the country worse off. An example presented in this paper is the case of Shell, which is accused of causing environmental degradation through its Nigerian subsidiary (Reed 2016). This paper provides an in-depth discussion of MNCs. It begins with definition of MNC and presentation of a notable multinational business, Unilever. Advantages and disadvantages of MNCs on emerging markets are then discussed followed by critical appraisal of an article on legal structures that MNCs consider when entering an emerging market. Afterwards, a debate on how MNCs adopt to regulation by local governments is presented and finally an appraisal of a lawsuit involving a MNC is appraised. Definition and Selection of a Multinational Company One of the growth strategies that businesses use is internationalisation, which is done for a number of purposes including market expansion (geographically), exploiting new markets that have not been exploited, and cutting down operating expenses by moving production into low-cost countries. All these strategies are aimed at increasing revenue and growth. Globalisation has resulted to the creation and growth, in number and size, of multinational companies. Maheshwari (2004) defines a multinational company or corporation (MNC) as an enterprise that has allocated its resources in foreign countries although it is nationally based regarding top management and ownership. The IBM Trade Corporation President defined a multinational corporation as one that “operates in many countries, carries out research, development, and production in those countries, has a multinational management, and has a multinational stock ownership” (as cited in Singla 2009: 105). In simple terms, a multinational company is a business that operates in the home country (at least where its headquarters are located) and at least one host (foreign country). Such companies compete at the global level. Therefore, they are often large-sized firms that pay special attention to their operations, quality, and advertisements. In addition, their management models are often complex due to their multiple nature of operation. There are thousands of MNCs, and this number is growing thanks to increased globalisation. Examples of prominent MNCs include Coca Cola, McDonalds, Kentucky Fried Chicken (KFC), Royal Dutch Shell PLC (Shell), Total S. A, Unilever, Proctor & Gamble, Toyota, and Nissan to mention just but a few. This section will focus on Unilever, a multinational consumer goods company whose headquarters are co-located in London, United Kingdom, and Rotterdam, the Netherlands (Unilever 2016). The company was founded in 1930 through a merger of two firms, Margarine Unie (Dutch) and Lever Brothers (British). After the merger, the company was dual-listed as Unilever plc (whose headquarters are located in London) and Unilever N.V (headquartered in Rotterdam). It is a major player in the global consumer products market with over 400 brands although it focuses mainly on 13 key brands that generate over one billion Euros annually (Unilever 2016). In terms of, Unilever ranks third largest company in the global consumer goods industry with Nestle taking the lead and P&G taking position two (Forbes 2016). Having started in 1930, Unilever also prides as among the oldest MNCs globally. With time, the company has expanded its markets by entering new countries in the bid to exploit new opportunities. Currently, Unilever has operations in about 100 countries while its products are available in over 190 countries. Its foreign operations generate the majority of its sales and revenues. According to the company’s financial summary, emerging markets are responsible for 58% of its business, which means that they generate more revenue than its local Dutch and British markets generate (Unilever 2016a). As shown in table 1, the company’s operations in Asia, Africa, Middle East, Turkey, Russia, Ukraine, and Belarus contributed the highest percentage of the firm’s annual turnover in 2015 at 42% while the American and European markets contributed 33 and 25% respectively (Unilever 2016a). In 2006, these foreign markets contributed the lowest share of the annual turnover but with time, their percentage contribution has grown progressively while the contribution of local markets has shown a significant decline. This table shows that the company has continued to invest in foreign markets. Figure one shows that annual turnover has been on the rise since 2009, which is in line with increased investment in foreign (Asia, Africa, Middle East, Turkey, Russia, Ukraine, and Belarus) markets. The geographical diversification (internationalisation) strategy that Unilever is adopting is seen to bear fruits for the company. Its operating profit has also shown a growing trend owing to market expansion through increased globalisation of its operations. As shown in table two, the foreign markets have again surpassed local markets in the contribution of the company’s operating profit (Unilever 2016a). These figures show that the foreign market has growth potential and Unilever is making every effort to exploit these opportunities. Table 1: Performance by geographical area as % of annual turnover (Asia/AMET/RUB = Asia, Africa, Middle East, Turkey, Russia, Ukraine, and Belarus) Asia/AMET/RUB 29 31 32 35 37 38 40 40 41 42 The Americas 35 33 32 32 33 33 33 33 32 33 Europe 36 36 36 33 30 29 27 27 27 25 Total 100 100 100 100 100 100 100 100 100 100 Table 2: Performance by geographical area as % of operating profit (Asia/AMET/RUB = Asia, Africa, Middle East, Turkey, Russia, Ukraine, and Belarus) Asia/AMET/RUB 25 30 23 37 34 33 38 37 33 40 The Americas 40 38 41 37 34 35 35 38 40 30 Europe 35 32 36 26 32 32 27 25 27 30 Total 100 100 100 100 100 100 100 100 100 100 Figure 1: Unilever's annual operating profit between 2006 and 2015 As earlier mentioned, Unilever manufactures and sells consumer products. Its business is divided into four product categories including personal care, foods, home care, and refreshments. Some of the notable brands include BlueBand (food), Magnum (refreshment), Omo (home care), Rexona (personal care), and Lifebuoy (personal care) to mention just but a few (Unilever 2016b). As shown in table three, the company’s leading product category with respect to percentage of total operating profit is Personal Care at 48% followed by Foods (31%) then Refreshments at 11% and finally Home Care at 10% (Unilever 2016a). The company seems to be shifting focus from Foods to Personal Care category. As shown in the table, the Foods category has all along been contributing the largest share of total operating profit but in 2015, there was a drastic change with Personal Care category taking a high lead (Unilever 2016a). Table 3: Unilever's product category performance as % of operating profit Personal Care 35 34 25 37 36 39 42 41 41 48 Foods 37 39 45 37 45 42 37 41 45 31 Home Care 11 11 17 12 8 8 8 7 7 10 Refreshments 17 16 13 14 11 11 13 11 7 11 Total 100 100 100 100 100 100 100 100 100 100 Advantages and Disadvantages of Multinational Companies for the Host Country The entry of a multinational company into a host country has both positive and negative impact on the local economy. The impact of this entry is dependent on economic, social, cultural, and political environment of the host country. Therefore, in evaluating the contribution that MNCs have on the host country, it is crucial to study and understand their advantages and disadvantages to the host country. Some of the identified advantages are explained below. 1) Increase in foreign investments Every country encourages flow of foreign capital so that it can get the required foreign capital to facilitate import of goods and services. When a multinational company enters a country, there is an automatic inflow of foreign capital. 2) Technology Transfer Mostly, MNCs originate from developed countries where research and development has advanced. In addition, these mega companies have sufficient resources to invest in technology development through research and development (Singla 2009). When MNC enter new countries, they bring along these advanced technologies and systems. Although the primary objective of using advanced technology is to enhance production and hence improve profitability, host countries benefit by learning about the new technologies. Local firms must improve their operation, effectiveness, and efficiency in order to compete with MNCs in the country. Those with sufficient resources invest in these newly introduced technologies, which lead to improved productivity and performance. In addition, they promote innovation, research, and development in host countries by providing locals with the opportunity to engage in creating new systems (Singla 2009). This new knowledge leads to the creation of new technologies in host countries. 3) Managerial revolution Since multinational companies are usually highly developed and performing companies, they usually employ best management techniques that enable them to record excellent performance. Local companies benefit by learning these management techniques and systems, which result in managerial revolution. Local firms must adopt management best practices from multinational companies in order to compete with the latter effectively (Maheshwari 2004). In doing so, the productivity and performance of local businesses improve. 4) Lower local prices of products and services Local consumers benefit from the entry of multinational businesses. Since they are usually large-sized businesses engaged in production of large quantities of products, cost of production per unit is lower than that of local firms (Singla 2009). In addition, these firms use updated technologies, techniques, and systems that associated with high efficiency and effectiveness, which enable MNCs to lower cost of production. The associated economies of scale help them to sell at lower prices than local firms thereby forcing the latter to implement cost-cutting strategies to compete effectively. Therefore, consumers in local countries enjoy reduced prices (Maheshwari 2004). In other words, MNCs help break monopolisation by local businesses by intensifying competition and therefore forcing local operators to adopt competitive strategies among which is price reduction. 5) Increase in quality of products and services Local consumers also benefit from increase in the quality of products and services they buy. As earlier mentioned, MNCs are usually cautious about the quality of the products and services they provide to the market because they compete at global levels. On the other hand, local firms may not be so much concerned about product and service quality. This is especially the case in the absence of MNCs. When MNCs enter a host country, they raise quality levels because they want to capture the local market and secondly because they have sufficient resources to invest in better techniques, systems, and technologies. Local businesses must raise the bar; otherwise, they will be forced out of the market (Patton 2012). Eventually, local buyers benefit from increased quality of products and services. 6) Reduction in unemployment rates MNCs employ thousands of locals in their foreign operations. Some of the MNCs enter foreign countries in search of low-cost labor, which means that their sole intention is to employ locals in their foreign branches or production centers. As Patton (2012) explains, employment rate plays a critical role in a country’s economic growth. High unemployment rate drags the country economically. On the contrary, high employment rate fosters national development. To explain this relationship further, whether a person is employed or not, he or she must use public resources such as public hospitals and roads, which the government must avail and maintain. Taxes are the main government revenue. When fewer people are employed, it means that the government earns less revenue than when there are several employed people with each paying taxes. Therefore, the higher the employment rate, the higher the government revenue and hence the greater the economic growth and national development. By helping foreign governments to fight high unemployment rate, MNCs foster growth and development of foreign countries. It is indeed the reason why various developing countries are trying hard to woo foreign investors consider their countries as ideal place of investment. 7) Growth in government revenue Multinational companies pay taxes and duties to local governments thereby increasing government’s revenue. In addition, increase in employment rates increases government revenue as already explained. Growth in government revenue translates to economic growth and national development. However, MNCs also have negative impact on host countries. Areas usually affected include local and mostly small businesses, people, culture, and environment. Lack of proper regulations protecting the host country from the negative effects of MNCs may counter the positive impacts investment by foreigners, as the later may engage in practices solely aimed at profit maximisation with little concern for the host country. Some of the notable disadvantages of MNCs on a host country are explained below. 1) Violation of labor laws and exploitation of workers Prominent MNCs have been accused of exploiting local workers through violation of labor laws. These cases usually occur where the primary objective of shifting operations from home country is in search of cheap labor (Singla 2009). In such cases, Asian and African countries have been on the receiving end. For example, in the 1990s, Nike, an Oregon-based shoe and clothing designer, manufacturer, and seller was accused of violating labor standards in its Indonesian and Chinese factories. Activists reported that the company was paying workers in these countries far below national wages, they were using underage labor, and were overworking their employees (Nisen, 2013). Although the company responded to the allegations by terming them as simply being malicious, such kinds of reports shine the light on employee exploitation that MNCs can conduct in the bid to maximise profits. They further show that when not checked, MNCs can violate labor standards leading to more harm than good. For instance, overworking and underpaying employees may lead to health problems such as depression, which leaves the country worse off. 2) MNCs may force closure of local and especially small businesses As earlier mentioned, the large size of MNCs combined with use of updated technologies, systems, and techniques enable them to enjoy economies of scale such that they can sell reduced prices. On the contrary, small local firms may not manage to sell at newly set prices, which are sometimes far below their production costs. This implies that these local businesses will not manage to keep up with the competition. Eventually, if not protected, they will be forced out of the market by either closing shop or being acquired by the MNCs. In the long last, multinational corporations enjoy monopoly and if not observed they might force prices up knowing that there are no rivals to challenge them. It is worth noting that many MNCs usually have their interest at heart with little concern for the host country. Therefore, if not controlled, they can control the market for their own benefit. An example is the acquisition of Kenya’s Interconsumer Products Limited (ICP) by L’Oreal, a multinational player in the beauty and health industry (L’Oreal 2013). ICP had faced stiff competition in the Kenyan market from MNCs including L’Oreal, Unilever, and P&G such that it was eventually forced to sell off a part of it and venture into other products (Juma 2013). Although the acquisition only enhanced L’Oreal’s presence and competitive strength in the East African market, it paints a picture of how small firms are under threat of exit, which in turn negatively affects employment rates. 3) Resource exploitation and environmental pollution In the effort to maximise profits, MNCs may exploit local resources knowing that once they are depleted, they (MNCs) can always move to another country. In addition, they may engage in practices that end up polluting the environment because they have little concern for the host country and its people. After all, all they want is revenue, which they send back to their home countries. The damage they cause may cost more than the money they leave within the host country in terms of salaries, wages, and taxes to the government. Critical Analysis of an Article Related to Legal Structure Decided by Multinational Companies when Entering the New Emerging Market This section analysis an article by Khanna, Palepu, and Sinha (2005), Strategies that Fit Emerging Markets. The three authors are professors at Harvard Business School. Therefore, the article is considered professionally written and therefore valid for critical analysis. The authors discuss about strategies that best fit emerging markets especially developing countries. Its intended audience includes multinational firms that intend to enter emerging markets and exploit identified opportunities. Globalisation is real and arguably the way to go for big market players that have exploited opportunities in their local markets. However, entering foreign markets is faced with a number of challenges, some of which involve legal issues. Other challenges that the authors highlight include political uncertainty, socio-cultural issues, fluctuating currency exchange risks, and policies. Developing countries have for a long time been considered high-risk markets. Consequently, multinational firms have preferred entering developed nations such as Brazil. However, third-world countries still present the greatest growth opportunity for multinational corporations. Consequently, these firms must come up with strategies to enter and operate successfully in developing nations. Nevertheless, prominent firms such as Dell are doing businesses very well in developing countries. Accordingly, Khanna, Palepu, and Sinha (2005) embarked on a research trying to understand how these firms managed to counter legal and other challenges associated with entry into new emerging markets. A notable strength with this article is that the authors consulted with MNCs. The paper is essentially a presentation of case studies outlining best practices to entering emerging markets. With respect to legal structures and challenges, the authors identified three best practices that successful MNCs have adopted. Firstly, successful firms take the initiative to study and understand institutional differences between their countries and all the potential countries of entry. Secondly, once they select the market to enter, tailor-make strategies and legal structures that best fit the country and which are different from ones they use in their local markets. Thirdly, these companies customise their strategies to fit the legal and institutional structure of every foreign country while observing their main business goal and structure (Khanna, Palepu & Sinha 2005). Khanna, Palepu, and Sinha (2005) go ahead to develop and recommend a five contexts framework that a multinational firm can use to map and understand institutional structure. The five contexts include political and social systems, openness, product markets, labor markets, and capital markets. Through use of the framework, a firm can understand the institutional structure of every potential country of entry, decide whether to venture or not, and then come up with entry strategies. For example, through use of the framework, the authors find that Brazil’s legal and institutional structure is in such a way that it highly welcomes foreign businesses while China’s policy is restrictive. Therefore, companies that intend to enter China can use strategies such as joint ventures while foreign direct investment (FDI) can be used for Brazil (Khanna, Palepu & Sinha 2005). The framework presented by Khanna, Palepu & Sinha (2005) is similar to the international market selection (IMS) criteria that Buerki and colleagues present in their article, International Market Selection Criteria for Emerging Markets (Buerki et al. 2014). Similar to Khanna, Palepu and Sinha (2005), Buerki and co-researchers argue that in order to enter a foreign market successfully, MNCs must conduct a critical analysis of potential markets. One of the areas of consideration, which forms part of the IMS criteria, is the institutional environment, which often presents as a considerable barrier in emerging markets. These authors have a similar opinion to Khanna, Palepu and Sinha (2005) on the difference in legal risk between developed and emerging markets. In fact, Buerki and company cite Khanna, Palepu and Sinha’s (2005) framework, which is an indication of the latter article’s importance on the issue of legal framework in emerging markets. In my opinion, the article by Khanna, Palepu and Sinha is an excellent guide for MNCs on addressing legal and institutional challenges associated with entry into an emerging market. The presented framework is a unique feature and strength of this article. More so, the authors apply this framework to four countries namely China, India, Brazil, and Russia by dissecting their institutional framework. In doing so, Khanna, Palepu & Sinha (2005) enhance the understanding of the framework and it application. Therefore, MNCs can easily use this framework before entering an emerging market. In addition, the fact that the authors consulted prominent MNCs and hence present case studies is a notable strength. It shows that the paper is not simply theoretical but combines theory with practice. It shows how firms have managed to enter markets by making necessary changes to strategies used at home markets to best fit the foreign market under consideration. Debate on how Multinational Companies Cope with Host Government Regulation One of the main challenges affecting MNCs is coping with host government regulations. Between 1950s and 1960s, many governments around the world did not interfere with operations of MNCs in their countries. However, things have changed drastically. Beginning early 1970s, governments that appeared to have a passive interaction with MNCs have stiffened their control and interference with the operation and management of multinational businesses. Policies and ideologies have been developed (and continue to come up) that impose some degree of limit on the strategic autonomy that MNCs previously enjoyed. There are two primary types of regulations that host governments impose on MNCs. The first type of intervention is one whereby the government of the host country sets out regulatory and fiscal rules that guide the manner in which all MNCs operate and compete in the country. This type of control seeks to limit the strategic freedom of multinational firms operating in the country. The second regulation is aimed at controlling the decision-making process or internal mechanisms of operation of a multinational business. Essentially, this second set of regulatory framework threatens the managerial autonomy of the firm (Doz & Prahalad 2006). These two types of regulatory control and intervention by host governments show that MNCs must come up with strategies to cope with the regulations. The way in which MNCs should cope with strict and often disadvantageous regulations has been a highly debatable issue. Some MNCs have decided to withdraw their operations from highly controlled markets while others have steered away from such markets. Others have devised strategies that have enabled them operate in highly dynamic countries in terms of policy and regulatory frameworks. Either strategy has its advantages and disadvantages. The decision that a multinational enterprise takes will definitely depend on a careful cost-benefit analysis. These firms must answer the following critical question. Is it economically advantageous to preserve strategic autonomy or compromise it in order to enter and operate in an emerging market? Again, the extent of compromise that has to be born is of great importance in deciding whether to withdraw from (or avoid entering into) or adapt to operate (or enter) in an emerging market. The main question is whether MNCs should preserve their autonomy or compromise it. Each of the two ways of coping with host government regulation has its reasons. For example, if a company finds that its survival is pegged on operating in a given country, developing strategies to help it adapt to respective regulation will be justifiable. For instance, Khanna, Palepu, and Sinha (2005) argue that MNCs must conduct a critical cost-benefit analysis in making the decision whether to enter a new market or not. In their article, Doz and Prahalad (2006) present an opinion from a senior manager from a prominent MNC, who argued that his company has operations in a number of developing countries where getting foothold provides a firm with competitive advantage. Accordingly, the firm has to compromise its operating strategies to adopt to the legal structure of each country because doing so is economically advantageous over quitting (Doz & Prahalad 2006). On the other hand, some companies may argue that strategic autonomy is key to their success and that any attempt to compromise this is unacceptable. In such a case, such firms would rather avoid entering an emerging market where the government has undesirable regulatory authorities. This argument explains why MNCs have always viewed developing countries with a critical eye. Indeed, in the 1960s and 1970s, most American MNCs chose to enter developed countries such as Brazil while avoiding developing countries in Asia and Africa (Doz & Prahalad 2006). However, their stand has changed significantly now that the same MNCs are developing tailor-made strategies for every potential emerging market. Nevertheless, some have still avoided countries with strict and “unfavorable” legal frameworks (Khanna, Palepu & Sinha 2005). Firms that use the withdrawal strategy seem to found their position on the importance of having strategic autonomy in all their global operations. In conclusion, the debate on whether to withdraw or adopt strategies to fit a given country’s legal structure will depend on the cost benefit analysis. Multinational enterprises compare the relative importance of setting foot in an emerging market over preserving their strategic autonomy. The results of the cost-benefit analysis determine whether a business can sacrifice its strategic autonomy for market entry or vice versa. Appraisal of a Lawsuit (Court Litigation) Related to a Multinational Company in an Emerging Market The lawsuit being appraised is one involving the Royal Dutch Shell and its Nigerian subsidiary (joint venture), the Shell Petroleum Development Company of Nigeria. The Royal Dutch Shell owns 30% share of the latter (Reed 2016). In this case, which is currently undergoing in London, Leigh Day, a law firm, is accusing the two oil firms for polluting the environment through oil spills in the Niger Delta, Nigeria. Leigh Day is presenting two communities, Ogale and the Bille, in the Niger Delta, where the main economic activities include farming and fishing (). The court ruled that it is possible to include the Nigerian subsidiary in the ongoing case after the accused argued that the case involving the Nigerian firm should be heard in Nigeria (Reed 2016). Shell has been involved in yet another lawsuit against its Nigeria subsidiary whereby it was forced to compensate the Bodo community 55 million pounds for oil spills. This previous case was heard in Britain, the company’s home country (The Associated Press 2015). One would wonder why lawsuits concerning Shell Petroleum Development Company of Nigeria are not being heard in the host country, Nigeria. These two cases point to the inefficient legal system in Nigeria such that claimants cannot trust the system to accord them justice. In addition, it is worth noting that the Nigerian Government, through the Nigerian National Petroleum Company, holds the majority share of 55% of the Shell Petroleum Development Company of Nigeria (Reed 2016). Therefore, the claimants feel that there would be a conflict of interest if the Nigerian legal system were to hear the case. So far, the court’s ruling shows that it is possible for MNCs to be held liable for operations of their foreign subsidiaries and such that legal issues facing the latter are heard in the company’s home country. Further, the ruling sets a good trend whereby MNCs must ensure that they foreign subsidiaries, whether fully owned or partly own through joint ventures, must operate ethically, responsibly, and within the law. Britain has initiated this development whereby in certain circumstances, a multinational enterprise can be held liable for actions of its overseas operations. In the Cape v Chandler case, the Court of Appeal in England highlighted risks of tort-based claims (Isted, Austin & Harkness 2016). In the case involving Shell, operations of the parent company and those of the Nigerian subsidiary are the same. Moreover, the parent company ought to have known and been aware of the risks of oil spills such that it would have initiated measures to prevent harm. The direction the case is taking whereby the Nigerian subsidiary will be involved in the case is highly welcome to show that both the parent and subsidiary companies must take full responsibility of their operations. However, it is the highest time that emerging markets establish and reinforce their legal systems to handle cases of MNCs operating in their territories. Conclusion Emerging markets are increasingly becoming attractive to MNCs although they had previously shied away from these markets due to weak legal frameworks and high risks of doing business. When MNCs enter foreign countries, either party benefits. However, these benefits are achievable if there are necessary and strong institutions controlling each party’s influence on the other. While MNCs promise increased employment and economic growth, they may leave the host country badly off if they do not operate responsibly. While some emerging markets show great growth opportunities for MNCs, some of them may avoid venturing in such markets altogether if, after critical analysis, they find that there will be threat to strategic autonomy. In this case, such firms value strategic autonomy above the opportunity in new markets. Nevertheless, some other global businesses are ready to compromise their strategic autonomy by tailor-making strategies that best fit to the said market. Such firms see a great growth opportunity in the emerging market. Deciding whether or not to enter (or continue operating or withdraw) an emerging market is usually a critical and complex issue. The management must consider a number of factors to determine and balance between market opportunities and risks. However, this paper has presented two frameworks that institutions can use to make a wise decision. Alternative strategies have been presented that range from entering to not entering. Companies that decide to enter an emerging market may be forced to adopt their operating strategies they use for the home market so that they fit the system and requirements of the foreign country. Bibliography Buerki, T., Nandialath, A., Mohan, R., & Lizardi, S 2014, International market selection criteria for emerging markets. The IUP Journal of Business Strategy, vol. XI, no. 4, pp. 7-41. Doz, Y. & Prahalad, CK 2006, How MNCs cope with host government intervention. Harvard Business Review. [Online] Retrieved from [Accessed June 9, 2016]. Forbes 2016, The world’s biggest public companies. [Online] Retrieved from http://www.forbes.com/companies/unilever/ [Accessed June 8, 2016]. Isted, J., Austin, A., & Harkness, T 2016, Parent companies, could you be liable for the acts of your overseas subsidiaries? [Online] Retrieved from [Accessed June 9, 2016]. Juma, V 2013, Interconsumer steps up market rivalry with new products. [Online] Retrieved from [Accessed June 7, 2016]. Khanna, T., Palepu, KG., & Sinha, J 2005, Strategies that fit emerging markets. [Online] Retrieved from [Accessed June 8, 2016]. L’Oreal 2013, L’Oreal acquires beauty firm interconsumer products in Kenya. [Online] Retrieved from [Accessed June 7, 2016]. Maheshwari, RP 2004, Principles of business studies. New Delhi, India: Pitambar Publishing Company (P) Ltd. Nissen, M 2013, How Nike solved its sweatshop problem. [Online] Retrieved from [Accessed June 7, 2016]. Patton, M 2012, The key to economic growth: Reduce the unemployment rate! [Online] Retrieved from [Accessed June 7, 2016]. Reed, S 2016, Shell and Nigerian partner are sued in Britain over spills. New York Times. [Online] Retrieved from [Accessed June 9, 2016]. Singla, RK 2009, Business Studies Class XI. New Delhi, India: V. K. (India) Enterprises. The Associated Press 2015, Nigeria: Shell agrees to pay $83.5 million for oil spills. The New York Times. [Online]. Retrieved from [Accessed June 9, 2016]. Unilever 2016, About. [Online] Retrieved from [Accessed June 8, 2016]. Unilever 2016a, Annual report and accounts overview. [Online] Retrieved from [Accessed June 8, 2016]. Unilever 2016b, Our brands. [Online] Retrieved from [Accessed June 8, 2016]. Read More
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