Implications for Managers of Multinational Corporations (MNCs) Essay

Implications for Managers of Multinational Corporations (MNCs) - Essay ExampleHowever, managers of the multinationals that seek to venture into emerging economies necessity to evaluate the business environment as their strategies argon shaped by forces beyond their control. The managers have a vital role to play while formulating new strategies and organizational structures when dealing with Governments and companies in emerging markets. monetary strategy The emerging markets have fast growing GDPs thitherby offering the MNCs with great opportunities and profit potential. However, the MNCs verbalism not only the risks of cultural and institutional differences, the managers of the MNCs also have to take into account the risks inherent in unpredictable politics and unstable economies (Anonymous, 1995). The managers thus have the responsibility to develop financial strategies that provide protective cover from excessive risks. As far as financial strategies are concerned, some MNCs use instruments such as asset-backed securities while others work with regional and global banks. Financial institutions such as the Asian Development fix help the governments establish priorities for economic reform and development. The regional/local governments offer resistance to MNCs as it fears the municipal production would be affected. The governments feel that while the MNCs would bring cutting-edge technology along with FDI into emerging economies, there is resistance from the domestic competitors. The managers must also take into account technology transfer, cultural distance, international experience, immigrant experience, industrial barriers, impertinent exchange rate and phalanx country barriers (Zhao & Decker, 2004). The MNCs have the power to stifle economy because of their mere size or so believes the emerging economy governments and hence the MNCs may face protectionist attitude from the host governments. MNCs may have anti-corporate and anti-establishment sen timents triggered by the civil societies in the host governments. Thus through the right accounting entry strategy the managers can overcome resistance offered by the protectionist government. The MNCs enter Central and Eastern Europe by forming strategic alliances through acquiring privatized firms or state-owned enterprises (Rondinelli & Black, 2000). These MNCs face the challenge of privatization although some governments do move forwards at speed to privatize the SOEs. Some Eastern Europe governments do make it difficult for foreign investors to enter into strategic alliances or form joint ventures. Russia receives very little FDI because of the high tariffs and non-tariff barriers on FDI. In fact, in some of the developing economies, the MNCs are seen as threats by some SOEs, privatized companies, government agencies or semipolitical interest groups that do not support foreign domination. Therefore the challenge for the MNC managers lies in developing alliances or acquisition s that benefits the shareholders, the host-country counterparts and the local government as well. The managers must hence prioritize business objectives while also selecting the outflank entry channels. They must evaluate the potential impact on the host-country stakeholders and determine local partner fit. If MNCs are seen as partners in privation and economic transformation the alliances or acquisitions are more likely to succeed. important restructuring may need to be implemented by the MNCs to