MNC Corporation Production Assignment

MNC Corporation Production AssignmentMNC Corporation ProductionAnalysis of MNC BehaviorIntroduction international great deal (or transnational corporation) (MNC/TNC) is a corporation or enterprise that repugns production institutements or delivers services in at least two countries. Very monumental multinationals run through budgets that exceed those of some countries. international corporations can have a powerful influence in international relations and topical anesthetic economies. Multinational corporations quicken an important role in globalization (Bartlett et al). Multinational corporations can be divided into deuce-ace broad groups according to the configuration of their production facilitiesHorizont everyy coordinated multinational corporations manage production establishments located in polar countries to produce corresponding products. (Example McDonalds) Vertically integrated multinational corporations manage production establishment in certain plain/countr ies to produce products that serve as input to its production establishments in other country/countries. (Example Adidas) Diversified multinational corporations do not manage production establishments located in different countries that be horizontally, vertically or straight (Example Microsoft or Siemens A.G.)The paper deals with analysis of MNC behavior of three common MNCs viz. Exxon Mobile, Royal Dutch and BP. These ar oil color and gas companies from India and china. The paper will explain about how the products of these companies differ or atomic number 18 similar to each other and how their trade strategies corporate strategies differ. All this will be explained through the Dunning O-I-L framework and world(a) Integration Local Responsiveness framework. This paper represents the analyse and contrast studies of different strategies. About the companiesMNC behavior differs across various military positions and is different regarding commercializeing, finance, human resourcefulness and other aspects related to the products. The three companies selected for analyzing MNC behavior differ in geographical locations, political conditions, cultural considerations and judicial frameworks. The general introduction of the all the 3 companies is as follows Exxon Mobil Corporation or Exxon Mobil (NYSE XOM) It is an American oil and gas corporation and a direct descendant of John D. Rockefellers Standard Oil comp some(prenominal). Formed on November 30, 1999 by the merger of Exxon and Mobil, Exxon Mobil is the worlds largest company by revenue at $404.5 billion for the fiscal year of 2007. It is to a fault the largest publicly held corporation by market capitalization, i.e. $501.17 billion. While it is the largest of the six oil super majors with daily production of 4.18 meg BOE (barrels of oil equivalent). Currently, the company ranks 1st in the world in net income, which was almost $40 billion last year.The Exxon Mobil Corporation global headquarters are located in Irving, Texas. The company markets products around the world under the brands of Exxon, Mobil, and Esso. It also owns hundreds of smaller subsidiaries such(prenominal) as Imperial Oil Limited (69.6% ownership) in Canada, and sea River Maritime, a petroleum shipping company (Exxon Mobile Corporation 2008).Royal Dutch Shell It is commonly known as Shell, a multinational oil company of British and Dutch origins. It is the second largest hugger-mugger sector energy corporation in the world, and i of the six super majors. The companys headquarters are in The Hague, Netherlands, with its registered office in London, United Kingdom (Shell Centre).The companys main business is the exploration, production, processing, transportation and marketing of hydrocarbons (oil and gas). Shell also has a fundamental petrochemicals business (Shell Chemicals), and an embryonic renewable energy sector sprouting wind, hydrogen and solar power opportunities (Royal Dutch Shell About Shel l 2008).BP (British crude oil) It was previously known as British Petroleum but now using only the initials, it is the worlds third largest global energy company, a multinational oil company (oil major) with headquarters in London, UK. The company is among the largest private sector energy corporations in the world, and one of the six super majors (vertically integrated private sector oil exploration, natural gas, and petroleum product marketing companies).Though, all these companies are involved in similar business practices, yet there are also certain deflexions among them. There is a compare and contrast scenario among these companies. To analyze these three MNCs, the Global Integration- Local Responsiveness framework and Dunnings O-I-L framework can be utilise (BP Global About BP 2008).Similarities and DifferencesThe products of all three companies are similar in the sense that all have natural resource seeking and efficiency seeking products. All three companies produce the akin kind of products, so they also require the same kind of raw materials for the products. The products they produce are all location specific. All the companies have their established positions in the international market and are among the six super majors in the oil and gas attention. They possess abundant resource utilization capacity. They have combative advantage, which helps them to achieve their strategic goals. The products of the companies are globally marketed.The major differences among the products of the companies are the quality and quantity of the products and the capital requirement for the products. The products also differ in the level and figure of technology used and the customer demand for the product. The location where the product is manufactured is also important and it makes a big difference for the company. The export and import of the products start out from company to company. The manufacturing and innovation among the products also vary depending on the Government rules, regulations and policies in the countries in which the companies operate. The products also differ on the basis of marketing strategies used to market the product.The reason for these differences can be explained through the Global Integration- Local Responsiveness framework popularly known as I-R model. It is generally related with ideas of value creation. It states that these differences add up because of differences in the competitive advantage of the companies and the strategies used by them. Strategies can be global, international, multinational or transnational (Bartlett et al). The risk handling capability of the companies is also one of the possible reasons for the differences among them. The proportion of the global assets, number of countries in which the company operates in value added activities and the value of the output are responsible for significant differences among the companies of the same industry (Rugman Hodgetts 1995).These differenc es are not general differences. These differences are responsible for the companys success and help it in making popular among the general public. The products of the company gravel known to the customers because of these significant differences and they are responsible for the ontogeny and revenue of the company (Bartlett et al).The marketing strategies also differ amongst various incorruptibles and countries on the basis of the strategies used to market the products. The differences between countries occur because of alterations in the market structures among various countries with respect to the transactional approachs. Differences also occur on the ground of capital availability and resource utilization. The difference in the market size is also very important.Marketing strategies differ across firms due to differences in the extent of market diversification and market stability of the firms. They differ according to the number of customers for the product and because of t he market allocation for the product.The firms have set up in their respective locations because according to Dunnings O-I-L framework, the assets which these companies possess are ownership specific and location specific. Though, they are available to all the firms, yet they are unique in nature and help the company to establish a difference for itself. This criterion of Dunning is based on the eclectic paradigm. The assets can be tangible like manpower, capital, etc. or intangible like technology, marketing, etc.Global, International, Multinational Transnational FirmsAs the companies grow and develop, there category changes and they become international, global, multinational or transnational firms. As time passes, their product category also changes.Global Firms consider the world as a single integrated unit with centralized scale intensive manufacturing. finished world wide diffusion and adaptation, these companies bug the parent companys knowledge and capabilities (Dunning 1 993).International Firms take the overseas units as offshoots of domestic strategy. Here the core competencies are centralized and others are decentralized. It builds cost advantage through global scale operations (Dunning 1993).Multinational Firms consider the world as a portfolio of national opportunities. They are self sufficient and decentralized. Through strong resourceful national operations it creates a response to national differences.Transnational Firms comprise of all the in a higher place three firms. They are dispersed, interdependent and specialized. They have flexibility, global efficiency and great learning capability.Different Corporate StrategiesThe corporate strategies of the MNCs differ across different locations as the Government policies and regulations are different in different countries. The goals and the means to achieve them differ according to the customer size and the market adaptability in different countries. The collaborations with the local partners also create a difference in the corporate strategies because they also have their companys policies and requirements. It also differs according to the company law of the respective countries. The terms and conditions of the local partners differ, which causes significant variations in the corporate strategy (Dunning 1993)..Innovations in MNCsInnovations are a growth trend in todays world and MNCs are successful till they maintain their innovativeness and creativity. Innovation does not necessarily come from the home country but it can also be sourced in the local country. The MNCs hire the employees of the local country so it can be possible that innovations are from the local country.Government and the MNCsThere are differences among the MNCs about the Government policies and regulations. Governments encouragement or inhibition for the oil and gas industry depends on the type of country and the requirement of such an MNC in the country. There are also significant differences acros s various locations for the involvement of Government in the MNC activities. This depends on the need of the country to grow and develop and also on the economy of the country. This can also be explained with the help of Dunnings O-I-L framework. The Government involvement depends on the asset availability of the country which is location specific.Social Cultural FactorsThe MNCs are also affected by social and cultural factors of the local country. They have to conduct the business according to the conditions in that country. The products should be manufactured according to the needs and requirements of the populate. The cultural and social sentiments of the multitude should be taken care of. For example, when Mc Donalds started its business in India, it make beef burgers. plainly this was failed in India, as it was against the cultural, religious and social sentiments of the people of India, because Indians worship cows so they would never prefer a beef burger.But many a times it happens that MNCs also shape the social, cultural, political and even the legal framework of the local country. The people of the local country many a times adapt to the products of the MNCs. For example, Pizza Hut, Dominos, etc. have totally changed the eating habits of the people wherever they have spread their business. The dressing style of the people changes, e.g. Indians started wearing western style clothes. They also convince the Government to make its legal policy flexible to suit their business conditions because the country is being benefited by the MNCs.The role of WTO in MNC activityWTO and regional trade agreements influence the MNC activities in many ways. The fundamental principles of WTO are non discrimination, free trade, encouraging competition and extra alimentation for less developed countries. Through non discriminatory trading system, all the MNCs are provided with their rights and obligations to be used while performing their operations. Each country and MNC receives amusement park exports and fair treatment in the markets of other countries. It provides responsibilities regarding implementation of agreements, technical cooperation and increased participation in the global trading system. These agreements help in removing trade barriers and employment free access. It also helps in protecting industrial property rights and dispute settlement. The trade agreement system helps in promoting peace, provides more choices of products and qualities (Cherunilam 2005).Export processing regulate refers to one or more specific areas of a country where some of the normal trade barriers are ruled out and bureaucratic necessities are let down in the desire of attracting new business and outside(prenominal) investments. This zone also refers to the manufacturing centers, which are labor intensive involving the import of raw materials and the export of factory products. This zone is of great importance for the operations of MNCs.Geography of pr oductionThe linkages in the value chain also differ around different locations. The relationship between the various functional processes is different at different locations. The spread of production differs according to the spatial distribution. This differs according to the elements of the value chain. The working of the functional processes affects the production. It differs from firm to firm because the functional units like finance, marketing, etc. differ across firms and across various locations. So the firms production differs according to geography as the resource availability differs from place to place.Also, the human resource management, organisational structure and managerial responsibility differ between the firms and locations. These are not the same at all the places and with all the firms. The manpower availability differs from place to place and from firm to firm. Because of workforce diversity, human resource management differs and is not the same at all places. Th e organizational structure also differs because of each firms policies and regulations. The managerial responsibility is different depending upon the size of the firm and its working. It also depends upon the strength of the organization, type of business it deals with and the get of work done by the organization (Cherunilam 2005). MNCs also hire local people for key positions because its not possible for the MNCs to hire people from the home country as it is a time consuming and costly affair. Instead of doing so, they can spend money on the training of the people in the local country. The Country Subsidiary Manager is responsible for the administration and management of the MNC in the country. He helps the MNC to recruit highly efficient and energetic people. He also helps in the growth and development of the MNC along with marketing its products.Comparison and Contrast between the Indian Market and Chinese Market for Exxon, BP and ShellThe strategies in both the countries will b e different for all the three companies i.e. BP, Exxon and Shell. The business purlieu, culture and traditions of both the companies differ from each other. The customer requirements, economic growth, political and social environment and legal obligations for both the countries can be compared and contrasted.ComparisonCEOs of global energy giants BP, Exxon Mobil and Shell are thrashing out their plans with Indian companies and state government officials to tenderness dollars into 5 states Orissa, Karnataka, Andhra Pradesh, West Bengal and Gujarat. The oil and gas giants (Exxon, Shell, BP), can enter the Indian market through Joint Ventures with the Indian companies like Reliance or any ONGC. To establish joint ventures with Indian companies for manufacturing, all the 3 companies should track the key trends and survey the competitive environment in the oil and gas industry, which will alter them to maximize their returns in India (BP, Exxon Shell whitethorn invest in 5 Indian sta tes 2008).Currently, Indian conversion kit markets are overflowing with duplicate and lowly quality products. Manufacturers must devote adequate resources for research and development to create world-class offerings that stand apart from the competition. Producing less expensive, lighter, and stronger fuel storage tanks could help the companies establish a leadership position in the marketplace. Reinforcing innovative products with strong after-sales service will allow companies to establish a brand image (Indian Automotive alternating(a) Fuel Conversion Kit Markets 2001).The entry strategy for China will be different. In China, the companies can enter through Merger or strategic alliance with a Chinese oil company. The companies should do a detailed study of the Chinese market to enter into strategic alliance with the Chinese companies, their growth patterns and their position in the market. As the entry strategy in both the companies will differ because of their business environ ment similarly, business strategies would also differ on the following grounds. Firstly, the customer ratio and demand differs in both the countries. China has more population than India, so it has a large consumer market than India for these companies. Secondly, as compared to China, the monetary value hike in petrol is more in India, so the companies can earn high revenue in India (Cherunilam 2005).Thirdly, Chinas economy is growing at a much faster rate than Indias economy. Fourthly, the income level in both the countries is different. Middle class population is high in India. The per capita income of China is more than India and even the disposable income in China is more. Nowadays, BP is focusing on an eco-friendly campaign, which can be a great success in India where pollution is a major problem. This way, it can easily attract customers and become popular.Fifthly, the culture of both the countries is different, which affects the strategies of the companies. India is a country of diverse cultures and customs, so people with different thinking and value are found in India. But China has cultural unity, so the values and traditions do not differ across the country. This is good for advertisement and packaging to the people. Sixthly, it is also the political and legal environment that plays a crucial role in any business. A company cannot ignore the political situation and legal formalities either in the home country or in the host country if it has to operate successfully abroad.There is a quasi-federal-form of government in India and democracy is the rule of the country. Whereas China is a communist country, so the political setup can make a difference to the strategies. Also, the legal environment differs from country to country. Indias market has easy access and there are no strict regulations for the trade. In India, after the liberalization in 1991, most of the sectors are candid for foreign companies. Foreign Direct Investment is increasing rapidly . FDI policy is liberalized and 100% investment is allowed, whereas in China, there is not so much liberty for foreign companies. Only, a limited number of foreign companies can establish themselves in China.ContrastThere are several points of similarities that affect the strategies of the companies in both the countries. twain the countries are in a developing stage and follow collectivism. Collectivistic culture tends to embrace interdependence, family security, social hierarchies, cooperation and low levels of competition (Cherunilam 2005). As such, the Chinese and Indian society historically focuses on social interests and collective actions, and de-emphasizes personal goals and accomplishments. Also, the people of both the countries are dominated by foreign products and import items.ConclusionThus, from the above discussion about MNCs, it is concluded that they differ across different locations in terms of their resources, working, legal framework, etc. They also affect the cu lture and social aliveness of the people of the local country. ReferencesBartlett et al. Building Layers of Competitive Advantage. Europe McGraw Hill Companies Inc.BP Global About BP. 2008. online. Accessed July 19, 2008. in stock(predicate) from World gigantic Web BP, Exxon Shell may invest in 5 Indian states 2008. online. Accessed July 19, 2008. Available from World Wide Web Cherunilam, F. 2005. International Business Text and Cases. New Delhi Prentice Hall of India Pvt. Ltd.Dunning, J. H. 1993. The determinants of MNE activity. In Dunning, J. H., Multinational Enterprises and the Global Economy 76-85. Addison-Wesley Pub. Co.Exxon Mobile Corporation. 2008. online. Accessed July 19, 2008. Available from World Wide Web Indian Automotive Alternative Fuel Conversion Kit Markets 2001. online. Accessed July 19, 2008. Available from World Wide Web Ramaswamy, V.S Namakumari, S. (3rd ed.) 2005. Strategic Planning Formulation of Corporate Strategy. New Delhi Macmillan India Ltd.Royal D utch Shell About Shell. 2008. online. Accessed July 19, 2008. Available from World Wide Web Rugman, A.M. Hodgetts, R.M. (1st ed.).1995. International Business. New York, McGraw Hill Publishing Company. AppendixGeneric Value Chain of OPERATION OUTBOND LOGISTICMARKETING SALESSERVICE planetary house INFRASTRUCTUREHUMAN RESOURCE MANAGEMENTTECHNOLOGY DEVELOPMENTPROCUREMENTINBOUND LOGISTICSecondaryActivity Or Supporting ActivitiesPrimary Activities obtain Ramaswamy Namakumari 2005.