Global Business Assignment - Reasons for Internationalization and Challenges for MNCs

Global Business
Assignment

Table of Contents
Individual Notes 1............................................................................................................................1
Individual Notes 2............................................................................................................................2
Individual Report.............................................................................................................................5
Introduction............................................................................................................................5
Analysis of domestic market..................................................................................................5
Strategy to internationalise.....................................................................................................6
Selected country environmental analysis...............................................................................7
Mode of entry, challenges it may find in the country and possible solutions........................8
Leadership qualities that supports the market entry...............................................................9
Conclusion............................................................................................................................10
Individual Reflective Essay...........................................................................................................10
References:.....................................................................................................................................12
Books and Journals...............................................................................................................12

Individual Notes 1
The European Community, former name of which is European Economic Community
(EEC), by name Common Market, was a regional organisation designed to integrate the
economies of Europe. On March 25, 1957, The EEC was created by six European Coal and Steel
Community members which were Belgium, France, Italy, Luxembourg, the Netherlands and
West Germany, that established the European Atomic Energy Community (EURATOM), which
was primarily designed to foster cooperation in the development of atomic energy, research and
its utilisation. The other countries that joined later in the year was United Kingdom, Denmark,
and Ireland in the year 1973, Greece in 1981 and later Portugal and Spain too came forward in
the year 1986. The EEC was designed with the objective of creating and developing a common
market for its members through eradication of trade barriers related with the movement of goods,
labour, capital and services and establishment of common trade policy (David and et. al., 2020).
(Ronit, 2020). The signed treaty also encouraged common agriculture policy (CAP) to protect
EEC farmers from agriculture imports and private agreements, which was established in the year
1962. By the end of July 1968 all the internal tariff were removed followed by implementation of
first reduction in tariff in January, 1959. Till the year, 1993, an entire single market was
established which was known as Internal Market which allowed European Countries to freely
trade within EEC with the movement of goods, capital, services and people.
Like ECSC, the EEC also formed four other governing institutions which were commission,
a ministerial council, a court and assembly. In the year 1965 Members of EEC signed the
Brussels treaty which merged commission of EEC, EURATOM and the high authority of ECSC
into a single commission after a creation of Economic and Social Committee to advise
commission and the council of ministers on a numerous range of social and economic policies.
Advantages of European Economic Community
 There are better jobs, wages and highly skilled workforce in the European countries
thanks to European Union that despite of Brexit emergence there is still a single market
which provide for the companies to negotiate on international trade.
 With the help of Internal Market and integration of the economies, Europe succeeded in
re-industrialisation of the continent just after the six years of World War II which made
the drastic condition in Europe as there was scarcity of food and jobs were few.
Disadvantages of European Economic Community
1

 Because of the Single entry Visa Schengen average person can travel across several
nations and its controlled boundaries making it more susceptible for many illegal entries
leading to more theft and insecurity to the countries (Zhou, 2020). Due to less travel
restrictions there are more chances to cross border with false documentations and ID.
 Despite of Unified market and structure, there is growing disapproval among many
countries as there are many cultures, ethnicities and beliefs and perceives things
differently. Evidently there are few wars among nations due to EU but nationalism,
fascism and other problematic issue could not be addressed.
Individual Notes 2
Today, internationalization has become one of the most important elements of the
effectiveness of MNCs and a vision for the future. In order for a company to be able to compete
locally, it is important that internationally. There are many reasons and the challenges which a
MNC company encounter when thinking about internationalisation of their business in the
foreign soil. This is also necessary in order to sustain the long run growth of the company and
being competitive and sustainable throughout their operations in more prominent and effective
operations. Below are the some reasons or the motive which illuminates why does a MCN
company are looking forward to internationalisation which are as follows-
1. Increase sales and profits
With the expansion of the global market, it is likely that an increase in sales volume from
total sales, as well as a reduction in operating expenses, will attract a larger customer base. In
addition, with the help of technology and the Internet, the transforming world trade has become
even more attractive to companies of different sizes (Kim and Kamalanabhan, 2021). By being
able to cash out their winnings, they will be able to reduce costs and improve business operations
and efficiency.
2. Large-scale economy
Some MNCs in order to grow their business, products like them are more likely to be
adopted worldwide. In many industries and globalization: can benefit the company, creating a
better quality and economy. This is especially true for companies operating in a very small
domestic market. In addition, internationalization can also be used as an opportunity to isolate or
extend a new product, service, or product.
3. Entering new markets and spreading risk
2