International Business Individual Assignment
2500 words Number each page, 12 point font Times New Roman, 1.5 spacing and 2cm margin on page
Select company from Global 500 MNC
Select country where company has invested in, analyse internationalisation of company (in terms of FDI)
QUESTION: What is the internationalisation process of your chosen company in this industry and country?
1) Analysis of MNC:
Key data supporting company's status as an mnc/use academic resources to illustrate and explain concept of mnc
A multinational corporation can be defined as a business organisation that operates in more than 2 countries. These companies tend to be based in their country of incorporation, with the establishment of subsidiaries in foreign countries (Smelser, Bates, 2001). It is crucial to distinguish clearly between what constitutes a multinational corporation capital flow to a foreign country. An organisation may be able to invest in another country in the form of capital, generally to seek higher returns. This would be equivalent to expanding the organisation's portfolio of investments and assets. However, the key component of a direct investment is an organisation's claim of ownership despite it being located in one country, over the operations in a foreign subsidiary or firm. Essentially, a multinational corporation is the result of foreign direct investment (FDI) that leads to the organisation effectively being in control of operations held in a foreign country (Smelser, Bates, 2001). As such, a more complete definition would be a business enterprise that is engaged in foreign direct investment and owns a stake, or performs value added operations in at least another country (Dunning, 1993).
Daimler, the internationally renowned parent company of Mercedes Benz, is considered to be a multinational corporation. To date, Daimler employs 284'000 employees across the world with production facilities in 19 countries and 8'500 sales centres (Daimler Annual Report, 2015). In addition, Daimler has a comprehensive network of research and development, financing and digitization facilities to support its bid in automotive industry dominance.
2) Host Country Analysis
One factor from host country that influences the internationalisation process of the firm and why?
Daimler's investment in China, leading to the creation of Beijing Benz Automotive Co., Ltd, can be considered to be a market seeking investment. Production commenced in July 2005, with an expected annual production capacity of 25'000 cars (China Daily, 2004). To date, the annual production capacity has grown to 250'000 cars (Daimler, 2016). I would argue that the decision by Daimler to invest in China has paid dividends as, with 373'459 cars sold in 2015, China has developed into the largest individual market for Daimler (Daimler, 2016). According to Daimler's 2015 Annual Report, the Chinese market has grown by 9% and was the largest contributor to the increased production volume.
Daimler's entry to China has greatly benefited China by creating new jobs which utilise local labour, the transferring of technology and manufacturing process and knowledge, increasing the industrial output in terms of automobile production, and its joint venture with Beijing Automotive Group has enabled local entrepreneurs and companies to form a partnership with an internationally established brand. The creation of Beijing Benz also intensified competition between car manufacturers in China.
Use theory from course to support argument, e.g Uppsala Internationalisation, Eclectic paradigm, Porter's diamond theory
3) Foreign entry strategies
Explain entry strategies performed by company. Use journal articles to explain concept of company's entry strategy and benefits
Identify constraints of selected strategy. combine journals and info from company to analyse constraints
4) International Business Impacts and Contributions
MNC's major contributions to host country
Use UN Global Compact Principles, where does mnc need to focus in current and future business? why?
References:
Dunning, J. H., (1993) The Globalisation of Business: The Challenge of the 1990s, London: Routledge
Smelser, N. J., Baltes, P. B., (2001) International Encyclopedia of Social & Behavioural Sciences, Amsterdam: Elsevier
Daimler Annual Report 2015, Daimler, viewed 01/10/2016,
China Daily 2004, JV renamed Beijing Benz - DaimlerChrysler, Daimler, viewed 01/10/2016,
Daimler, Beijing Benz Automotive Co., Ltd. viewed 01/10/2016,
Daimler, 2016, Investor Relations Release - Mercedes-Benz achieves fifth record year in a row, viewed 01/10/2016,