Global Business: Challenges and Strategies for MNCs

This document discusses the reasons why MNCs internationalize their business and the challenges they encounter in the process. It covers topics such as the analysis of the domestic market, strategies to internationalize, selected country environmental analysis, modes of entry, and leadership qualities supporting market entry.

Global Business
Table of Contents

EEC (European Economic Community)............................................................................................4
Discuss why MNC’s internationalise & typical challenges they encounter.......................................4
1. INTRODUCTION.............................................................................................................................6
2. Analysis of domestic market..........................................................................................................6
3. Strategy to internationalise............................................................................................................7
4. Selected country environmental analysis.......................................................................................7
5. Modes of entry, challenges it may find in the country & possible solutions..................................9
6. Leadership qualities that supports the market entry.....................................................................11
7. CONCLUSION...............................................................................................................................12
REFERENCES....................................................................................................................................13
Books & Journal:.............................................................................................................................13

EEC (European Economic Community)
The EEC was established and design with motive of creating a common market
amongst its members through the elimination of trade barriers and developing a common
external trade policy. This community was formed in 1957 to work with mutual cooperation
in the market without facing any problem or issues. The European community includes three
associations which were European Economic Community European coal and steel
community and European atomic energy community. In 1993, when Maastricht Treaty went
into effect European community was rolled out into the European Union. With the
establishment of this community business sector was becoming more expandable within the
market. It was founded by Jean Monnet and it is a part of an economic Union. This
community formulated external trade policies were also implemented with new policy and
procedures with the agriculture policy to protect the farmers from agricultural imports
(Brenkert, 2019).
EEC was founded by the six states and other two communities which were also
known as inner six are the outer 7 who form the European free trade association. The main
purpose of EEC has been given below-
 Development of custom Union with the common external tariff
 Common policies for transport trade and agriculture
 Enlargement of the EEC the rest of Europe
For the custom Union the treaty provided 10% reduction in custom duties and up to 20%
of global import quotas. This has led to ease of running the market and other activities in a
smooth manner. With Establishment of this community, balance for economic growth and
development able to achieve with proper considerations. )(Kasemsap, 2020).
Moreover, they also regulate and implement the new strategy and tactics in relation with
the tariff and taxes so that market is able to run the business properly. In relation with the
McDonald, this help them to important export their raw materials for the food and beverages
around the world in in effective way stop this increases the coordination as a less mutual
cooperation among the business sectors and other countries. Furthermore, this gives a new
hope to the business and industries tour and their activities functions and operations in well
organised manner.
Pros-
 It gives leverages to the business sectors and other communities
 It also provides assist to many businesses to run their activities smoothly.

Cons-
 Due to difference in ideas problems occur in the communities
 Some policies and decisions are not acceptable by organisations
Discuss why MNC’s internationalise & typical challenges they encounter
MNCs adopts the internationalise procedure within business sector because they wish
to expand their business and run the activities as well as operations all over the countries to
gain more profit and market share growth. Many MNCs use different tools and techniques as
well as methods to access the international market within a period of time. It is not easy to
international business because it requires connection, strong communication and deep market
research. Another reason for making the business internationalise is that MNC’s are able to
acquire the reliable resources as well as manpower for their function and operations around
the region and countries.
It also allows them to understand the market trends and explore new opportunities
through the internationalisation. It is a longer and time consuming process but is effectively
used by many enterprises to gain the competitive advantage. In relevance with selected
enterprise, they also use the internationalisation process with proper market is and
consideration which help them to analyse the negative and positive impact on their business.
There are many challenges faced by them when going for the internationalisation and
discussed below-
 Internationalisation process- One of the main challenges faced by the MNC is
internationalisation process in which planning and organising li activities such as
finance human resource and other are being undertaken and considered which is a
difficult process and focus as well as knowledge. To be able to carry out the process
the company needs a deep analysis of market and situations as well as capability to
enter or not. )(Johnston, 2019).
 Selection of target customer and market- Another challenge MNCs encounter is
that it is difficult for them to identify and examine the target customer as well as
market for their product in business. This is because market is new; customers taste
and changing demands is unknown which is a problematic situation for the business
to access the potential market. Making analysis not easier as if you care knowledge of
local market and people show the distance regarding the introducing product and
services are being done in proper way (Rummel, 2019).
 Government rules and regulations- When going for the internationalisation it is also
difficult for the MNCs to run their business as in different countries different rules
and regulations are being regulated and considered which have to be accepted by the
companies who are operating their business. Many MNCs need to be pre- prepared

while entering into any other country government and legal laws so that it is easier to
eliminate the future risk.
 Competition- Further challenges is that when entering into the internationalisation
process, the company also MNCs faces competition and rivalries by the existing
brand as well as enterprises due to which it become difficult for them to introduce a
new product within in the market.
 Finance and raising capital- Another challenge faced by the MNCs is that in foreign
market it is difficult to raise and finance the business for the activities as because
financial institutions took time to provide the capital for the new businesses. It is
important for enterprise to disclose the information to the financial institutions so that
it becomes easy to raise the capital for carrying of the business activities.
 Promotion and advertisement- Promoting and advertising the business is also
difficult when going for internationalise business as because it require strong network
connections and relation with the market association. Moreover, it is a cost expensive
process in which decision making is to be done after proper conservation as well as
analysis of the various situations (Feld, 2019).
After a brief analysis affirmative it has been seen that when going for internationalising
the business many MNCs faces various challenges which slow down their growth and
development within the market. It is responsibility of the manager to make ensure that all the
problems or issues encounter by them need to consider with correct measures. With the help
of this it will be easier for them to carry on their function operations in most organised and
efficient way.
1. INTRODUCTION
Business and industrial sector is a wider and broader concept which is changing with
rapid scale. Most of the organisation and of the global business for the expansion at larger
scale stop Google business is defined as accessing a running a business over the many
countries. MC Donald, multinational corporation fast food Company headquartered in U.S.
with the increasing in competition they are developing and expanding their stores around the
world. They have many computer such as burger king, KFC Wendy's company etc. This
report includes research on European Economic Community, analysis of domestic market,
strategy to internationalise, selected country environmental analysis, mode of entry and
challenges and leadership qualities supporting market entry. Entering into international
market is not an easy task and requires deep level of market research as well as high level of
skills and knowledge about the trend and change analysis (Malik,2019).

2. Analysis of domestic market
Domestic market is defined as trading of goods and services within the single country
or home country. It is important to analyse the domestic market of a MNC before going with
the internationalisation. Moreover it is also essential to be aware about the friend and
situation of domestic market so that in become easier to enter into foreign market with proper
preparation. For example McDonald in the home country U.S have the deep knowledge about
the culture and people preferences always demand through which they are able to fulfil the
requirements and provide the product accordingly. Through this, they target their potential
customers on the basis of demographic market segmentation through which they make
decisions regarding their product and services effectively.
McDonald is aware about the local people and market situations which help them to
introduce or expand their business and deal with the competition in proper manner. This also
results in establishing the relationship within the market and government authority. Doing
analysis of domestic marketing essential because it gives the knowledge about the progress
level as well as position of the business whether it is capable enough to enter into foreign
market or not. Manager is responsible for the analysis of the market through the use of tools
and techniques which are suitable for the organisation. This also shows that it helps in
examining the strong and weak areas of business at large scale which could be improved
when accessing internationalisation (Silva, 2019).
3. Strategy to internationalise-
Competition with in the business sector is increasing with rapid scale and it is vitamin
necessary for entities to adopt the strategies and tactics of internationalise process in
smoother way. To globalise the business, it is important to use the strategies within the
weather so that it is easier to carry out the activities so they are ample number of strategies
which are being used by MNCs to become internationalise discussed below-
Exporting- Exporting is defined as selling and offering the products in a different
market across the borders it is another way of making business international eyes through
sale of goods and essential commodities to another country for sale or exchange. In this
method company manufactures the products in the home country and sell it to another
country. In relevance with McDonald, it is a best way of going internationalise as they can
export their raw materials for the product to other countries on the basis of demand and
requirement. It requires strong network and number of channel of distribution which will be
helpful for business to run their activities (Bengtsson, 2018).

Standardization strategy- It is type of strategy which is used by the company when
it treats the whole world as a single market with little variations. In this type of strategy, that
one product meets the need and demand of all the people from everywhere. For example
Apple uses standardization strategy as because their products are not available for
customisation to the local users.
Multi-domestic strategy-Many of the retailers go with the strategy as because they
need local premium all kind of customer’s tastes for their business. McDonald can also focus
on this as because it will give rise to their profit and customer level ratio (Sort, 2020).
Transnational strategy- It is being considered as combination of both the multi-
domestic as well as standardization strategy. It is mostly used at the time of international
competitors have a cost pressure over the company. It is difficult to implement by the
organisation because and we need to achieve the economies of scale and growth but also to
fir to be flexible to respond to the local conditions or customers (Venkatesh, 2018).
After a brief analysis of thermometer it has been seen that with the specified strategies
it will be easier for MNC’s is to be go with the internationalise process. It is a time
consuming process but need to be used with proper market research.
4. Selected country environmental analysis
Environmental analysis is defined tool which is used by organisation to analyse the
factors external and internal which have a deep impact on entity performance. In relevance
with McDonald, they also use this tool with the help of PESTEL Analysis which is described
below-
PESTEL Analysis- It is a tool which is used by enterprises to examine the external
factors which have impact on corporation business.
Political factors- These are defined as factors which include governmental law,
Labour law, economic and culture etc. are essential to be considered by the organisation
when going with internationalise as because that affects the productivity of the firm. In
relation with UK implication of Brexit have a deep impact on organisational sector.
Economic factor- These are those factors which are not controllable by the entities
and involve inflation and deflation rate, tariff and non-tariff etc. Labour cost in UK is
dynamic and due to which it is difficult for MNCs to carry out their business smoothly. It is
important for manager to be aware about the changes and economic status of a country in
which the business is going to be implemented as it will help them to organise and plan
everything accordingly.
Social factors- Further comes the social factors in which income, religion, culture
attitude and behaviour are being focused. By considering these elements it is easier for

McDonald to introduce the products and services within the market of UK. It is important to
focus on search elements so that decision making regarding the price product and other
activities is being done without facing any problem or issues.
Technological factor- This involves using of advanced technology and tools within
the market such as use of artificial intelligence advanced software and hardware etc. In
relation with the UK, the country is well equipped with technology and which is beneficial
for McDonald to carry out their management system easily and effectively.
Environmental factors- It includes weather temperature pollution waste management
etc. These are also essential to be considered when going with the globalisation as it will help
McDonald to use the resources and products without harming the citizen of the society. It
requires deeper level of market research as well as knowledge of environment and the rules
and regulations so that decisions are made accordingly. Moreover in UK people sensitive
towards meaning environment and protect it from hazardous things does it is essential for
selected entity to use raw materials and other things properly (Abadeh, 2018).
Legal- It involves contract agreements which are enacted by the law and government.
These are also important to reconsider by the organisation as when going with the partnership
or joint venture etc. In context to McDonald, legal department and team of companies well
aware about the rules and regulations but it is also important to study the legal process of
country in which business is to be opened. Every country has different types of legislations
and according to which day regulates policies as well as procedures within the market. The
chosen company can consult with lawyer or other parties which will help them to understand
the legal process and procedures of UK (Park, 2019).
After a brief analysis of above paragraph it has been analysed that environmental
analysis is essential of a country in which business is is going to be implemented because it
will help organisation to implement strategies as well as tactics and make decision in the
same way. Furthermore, to conduct this tool reliable information as well as data is required so
that analysis done appropriately. This also results in elimination of risk and problems which
can occur during the globalisation or internationalise process.
5. Modes of entry, challenges it may find in the country & possible solutions
In process of entering into a foreign market, there are many ways through which a
particular organisation can enter. It depends upon the firm to choose the most appropriate and
suitable entry mode through which it will be easier for them to run their business.
Joint venture- It is defined as joining of or sharing the ownership and management
with another company or a brand to expand the business at both national and international

market. In relation with McDonald, with the help of this strategy they can easily enter into
international market.
Advantages-
 Product development and business expansion is done mutually which assist them in
attracting more customers.
 In this, partners are able to develop relationship with each other and learn new things
mutually (Liu, 2020).
Disadvantages-
Outsourcing- It is another form of entry mode in which some getting work done for
transferring the amount of portion of work is been given to the outside suppliers. It is and cost
effective method as it is given to the expertise people and risk is being shared among the
partners.
Advantages-
 It is cost effective process and reduce the workload of employees.
 This help organisation to use the employees and resources efficiently (Rodríguez,
2020).
Disadvantages-
 There is high risk of disclosing the confidential data and information.
 Customers are less focused towards the product and brand.
 Also in this more risk is being shared by both the parties equally which help business
to run their operations appropriately.
Franchising- It is a way of more entering into a foreign market in which franchisor
provides licence on terms and conditions to the franchise to run the business and help in
organising planning training merchandising and many more. In relation with McDonald, they
can opt for this strategy as it will help them to create awareness of the brand worldwide and
increases the customer ratio.
Advantages-
 It is less risky than other mode of entry and is beneficial for increasing the
productivity.
 Employees are highly motivated which makes it easy for entity to run their functions
effectively.
 Enterprise gets advantage of expertise skills as well as knowledge and used it in
business.
Disadvantages-

 In this, it is difficult to keep the trade secrets confidential & which cause a huge
problem for business.
 Sometimes, franchisee might competitor in future & focus is required at higher level.
 Selecting of wrong franchisee might affect the firm goodwill as well as brand name.
Merger and acquisitions- Merger is defined as combination of two or more than two
companies with common purpose and acquisition refers to taking and acquiring the control of
a company by the another entity. It can be regarded as friendly acquisition or take over
depending about the situation as well as motive (Koska, 2020).
Advantages-
 Merger with another company expand the business.
 It also provides exploring of new opportunities (Tracy, 2020).
Disadvantages-
 Acquisition a company might have a bad impact on firm capital and other assets.
 It requires a strong network chain connection and awareness about the market.
Licensing- It is a mode of entry and a method in which enterprise provide and give
permission to the agencies or individual person to do the business or use the product for a
particular period of time on agreed terms and conditions. It is to be considered as fast method
of entering into international market and in this resources as well as information are being
utilised at optimum level.
Advantages-
 With help of licensing, it is easy to expand the other functions and department of
business.
 It helps in reducing the unemployment.
Disadvantages-
 Licensor may use the product or brand name in wrong way.
 Any disputes between the contract might disrupts the business environment.
Challenges-
 To select the entry modes, suitable strategies and planning is required by organisation.
 These are time consuming processes and distract the company form their home
country.
 Cost and manpower is involves which are strong as well as weak part of business.
Solutions-
 Expertise or consultancies are to be hired for selecting the mode of entry.

 Manager should perform multi-tasking functions so that focus is given on both the
sides (Brenkert, 2019).
 Proper planning and utilisation is to be done of manpower as well as capital which
can be further used in future perspective (Arasli, 2020)
After examining the above matter it has been seen that it is necessary to focus on the
modes of entry if honours wants to enter into for market within a period of time. There are
also many challenges visa faced by them during the process and which are needed to be
solved thoroughly. With the deep level of market research and use of extensible knowledge it
will be easier for entity to enter into international markets and run the business effectively.
6. Leadership qualities that supports the market entry
For entering in a new market it is essential to the organisation to appoint effective
leader. This is because leader is important part of every organisation as they guide the
organisation towards the goals and objective as well as manage resources within the firm for
achieving this objective in an appropriate manner (Tracy, 2020). In context of McDonald it
want to increase its market operation in market of UK where it is important to appoint a
proper leader who can guide organisation employees toward the goals and objective as well
as easily achieved by implementing their leadership. Some of the skills of the leaders are
described below which are directly related to entering in a new market.
Customer-focused: a good leader must be the focus on increasing the customer base
for the organisation within the new market because it is important for the firm to retain large
number of customer with it for successful achieving its objectives and implementing its
business operations in a new market. McDonald’s also want to operate its functions within
the UK and for this expansion activity it requires large number of customers which can be
effectively attracted by the proper leadership quality.
Clear vision: Leaders have a clear vision of their direction as well as the effective
roadmap to take all organisations together they can achieve the objectives. A good leader
must possess the ability to focus on many things as well as get a clear vision of the goals and
objectives in his mind as well as the mind of customers and employees working within the
organisation for eliminating the competition in the new market and developing a proper
marketing (Koska, 2020).
Flexibility: it is also a quality which should be possessed by an leader for entering
within the new market because there is continuous changes within the markets and can
impact negatively on the leader who are not flexible according to change in situations.
McDonald required those type of individuals who can easily change and adjust their cells as
well as there's leadership styles according to the changes within the market and increase
innovation within the organisation.
Investment in employees: for expanding the market of the organisation as well as
entering in the new business it is important for the firm to manage its employees in an
appropriate manner where they can perform effectively for achieving the goals and objectives

of the organisation. What is quality of a leader to invest in employees by providing them
guidance according to the changes in environment as well as have them in improving their
skills and overall job performance where it can easily manage the supplies as well as
technology resources within the organisation and increase the satisfaction of employees about
their (Arasli, Altinay and Arici, 2020).
7. CONCLUSION
After a brief analysis of above report it has been concluded that it is important to
understand the concept of global business so that it is easier for organisation to enter into
international market or become internationalise. With considering the European Economic
Community, it has become easier for entities to run their business worldwide. The present
report give the brief knowledge about modes of entries challenges faced during the process as
well as strategies to become internationalise. Global business is benefit for country as well as
industrial sector as it gives rise to the growth of economic scale and increase the GDP of a
country. Moreover, it is essential to be aware about the market situations as well as trends so
that decision during the process is been made effectively and without facing any problem.

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