Multinational Corporations: Strategies and Impacts

This assignment requires students to critically examine the strategies employed by multinational corporations (MNCs). A particular emphasis is placed on comparing and contrasting the approaches taken by MNCs from Japan and Taiwan. Students are expected to delve into the advantages and disadvantages associated with MNC operations, considering their impact on both host countries and the global economy.

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THE EVOLUTION OF MULTINATIONALS FROM JAPAN AND THE ASIA PACIFIC
Student’s Name
Course
Professor’s Name
University
(City) State
Date

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Rise and Growing Role of Multinationals from the Asia Pacific Region
Notably, multinationals are agents of civilization, commercial and industrial advancement in
regions such as Asia, Africa and South America .Further the rise of Asia Pacific multinationals
has been linked to boosting commercial relations and ties between Asia Pacific countries and the
global economy. Noteworthy, multinationals are criticized for favoring home country with
regards to economic policies and decisions as compared to foreign home concentration. Through
the globalization, multinationals are able to enjoy large economies of scale and enjoy
competitive or comparative advantages which would otherwise be not available thus accounting
for the rise and growth of multinationals (Reference for Business 2017).Various Asia Pacific
nations have Multinationals regionally and internationally.
The rise of many multinationals can be attributed to the fact that there’s ready availability of
raw materials for trade in the Asia pacific regions because it makes it easier and cheaper to
engage in production .Also ,the ready market available for the goods and services provided by
the Asia Pacific countries has made the rise and growth of multinationals all the more easy and
rampant due to the fact that without a market ,products go to waste and there’s no need for
production(Gillies 2000) However ,ready market requires a constant or surplus supply of goods
thus making profits for multinationals .Also, some Asian Pacific multinationals have risen and
grown due to the need to exploit raw materials in foreign economies and to explore and penetrate
new markets thus accounting for the growing globalization of companies.
Additionally, favorable foreign investment initiatives such as low production costs, tax
breaks, subsidies have engineered the rise of multinationals from the Asia Pacific Region to
global heights (Malik and Aggarwal 2012).Moreover, through a foreign country with low
production costs multinationals are able to maintain cost competitiveness which is an advantage

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to companies and businesses. Further, the rise of multinationals have been attributed to the fact
that some multinationals possess various advantages over certain environments thus able to
thrive in weak environments. Multinationals have strong home concentration and advantages
thus its able to cross borders and service. some multinationals are believed to possess
internationalization capabilities thus the ability to venture into foreign markets .
Usually, Multinationals enjoy low labor and production costs in more foreign countries
inclusive of surplus profits which has immensely contributed to the rise and growth of
multinationals across the globe. The liberalization of home markets by Japanese,
Taiwanese ,Korean and Chinese governments has encouraged foreign direct investment. The role
played by multinationals in the Asia Pacific region can’t be ignored in the sense that through the
rise and growth of multinationals, employment opportunities have been created both in home and
foreign economies, revenues for both governments have been boosted hence contribution to high
gross domestic product for both home and foreign countries (Research matic 2017).Trade
liberalization, economic growth are some of the significant role played by various multinationals.
Through foreign direct investments, multinationals are able to boost economic growth
levels of the host country through its addition to the investments index of the foreign country..
Role of growing Multinationals
According to the International LABOR Organization, multinationals distribute
capital ,employment opportunities and technology through their operations thus benefiting both
their home countries and host countries. Through the activities, multinationals transfer
technological knowledge and expertise between the two countries ,create employment
opportunities in both host and home countries and transfer management strategies from home

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countries to host countries(Soni 2012).Further ,there increase in the trade volume of the host
country in the event of multinationals setting up. Through the entry of multinationals ,some host
country monopolies might be broken due to entry of new players thus increasing consumer
choice, variety and sovereignty. With the recent technological advancement, host countries are
able to enjoy research and development outcomes emanating from the operations of
multinationals .
In addition, through multinationals, host countries are likely to reduce the volume of imports
and export more thus boosting its revenue from exportation of goods within its economy.
Following the growth of multinationals, economic growth and development is likely to increase
due to the stimulated demand for goods and services through the foreign direct investment by
multinationals. Due to investment levels going up, more employment opportunities will be
created in the host county, the availability of competitiveness will influence consumer choice
thus leading to profits being made. In addition, the growth of multinationals in host countries has
expanded due to the flexibility of rules and regulations on foreign investments and the
availability of financial incentives such as low labor costs, low taxation brackets and tax breaks
have immensely boosted the growth and rise of multinationals.
Also, multinationals have promoted research and development in developing countries. Most
multinationals venture into less developed countries due to the competitive advantages of their
home countries thus they are able to maximize profits and penetrate new markets through foreign
investment .
China

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Noteworthy, twelve Chinese multinationals were noted in the Fortunes Global 500 list to
which the numbers have risen significantly since the year 2011.Notably, China has invested
substantially in Germany various industries .Chinese multinationals have invested in its
telecommunications industry through the acquisition of the Medion by Lenovo ,which is a
Chinese multinational. Additionally, the Chinese have invested in Germanys, Automotive
industry through the Greely Holding Group and the Chery Automobile
Corporation .Machinery ,Renewable energy and the Transport sector have Chinese Entrepreneurs
in Germany through the Sany Group, Trina solar and China CNR corporation
respectively(Ecovis,2014).
Source: Ecovis.Com
Strategy
Predominantly, Chinese multinationals have incorporated corporate strategy and
management initiatives to guide the operation of its multinational companies. Mainly,
integration, diversification of products and services plus globalization are the pillar corporate
strategies for Chinese multinationals(Zhanming N.d ).Through integration strategies, Chinese

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multinationals have expanded their economies of scale and expanded their operations regionally
and internationally .Integration strategies are vertical or horizontal. Notably, Tsingtao Beer is a
good example of horizontal integration. Chinese multinationals have redeployed resources ,assets
,capabilities and labor in an aim to diversify its multinational companies .through horizontal
diversification, innovative products have been introduced into the same market hence the term
diversification .Hisense is a living example of diversification.
Innovative strategies have been incorporated into the operations of multinationals to boost
competitiveness for globalization purposes. The need to make products and services competitive
at the global level to maximize profits and to expand to newer markets hence the term
globalization. Most Chinese products are aimed at globalization due to their unmatched high
quality thus boosting its trade expansion volumes at global and regional levels.
Japanese Multinationals
Noteworthy, Japanese foreign direct investment levels are lower nationally and globally.
Specifically, Regarding China, Japanese multinational marker share is below that of the
European countries, the United States of America, Taiwanese and Korean foreign investment
levels. Predominantly, this is attributed to inadequate utilization of the China market share by
Japan and the reluctance to invest in research and development opportunities .Also Japanese
multinationals exhibit low localized management thus contributing to its low control of
multinationals regionally and globally (Masuyama,2004).To Japan, China is an export hub more
than an investment destination hence the low market share in China foreign multinational index.
Strategy

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The Japanese multinational adopted the alliance strategy with various with small firms having
competencies complementary to its multinational Sony thus enabling it to expand and enter new
markets(Dumitrescu,Scalera,2012).Moreover, through an international strategic alliance Japan
entered into an alliance with a Swedish telecommunications enterprise. ,Ericcson to partner with
its own Sony Corporation hence the Sony Ericcson electronics company based on the
technological prowess of both multinationals(Dumitrescu and Scalera,2012).There are various
strategies implored by multinationals to stay afloat and make profits. Commercial strategy,
market positioning are some of the strategies implemented by many large
multinationals .Notably, international strategic alliances are adopted by multinationals to
penetrate new markets.
Further, diversification is another strategic move on the part of multinationals in sense that
through the introduction of extra menus and expansion of more delivery points the Macdonald s
enterprise expanded its operations and profits significantly. Predominantly, Japanese
multinationals have ventured into the ,telecommunications and manufacturing ,engineering and
construction industries of various economies .Innovation is one of Japans strongest foreign
investment opportunity .For instance ,the Japanese computer companies, Sony, Canon and
Fujitsu are among the world leading brands .regarding electronics, Sony, Toshiba ,Panasonic, are
among the leading multinational brands for the electronic industry and business(London 2017).
Additionally, the Automobile industry is dominated by Japanese multinationals such as
Toyota, Nissan ,Mazda among other business players forming multinational companies across
the Asia Pacific region and globally .The engineering and construction sphere has various
multinationals Takenaka, Komatsu, Kobe Steel among other industry players in various nations.

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Korean Multinationals
Noteworthy ,Korean multinationals have featured in the Forbes Global
2000.Remarkably,Korean multinationals have ventured into the automobile industry through its
notable Hyundai Motor Group of companies dealing in the manufacture of automotive in most
countries .Moreover, Hyundai has three affiliated automotive manufacturing companies .Further,
Korean companies have ventured into steel industry in foreign countries. Specifically, Posco is a
Korean steel manufacturer (Hill, Wagner and Wong 2015).Also ,Korean multinational, Samsung
has ventured into the telecommunications and electronics sector of various countries thus
boosting its sales ,profits and creating employment opportunities. Moreover, Korea is ranked
second as a semiconductor enterprise and memory chip maker thus putting Korean in the world
top producer list of semiconductors.
In addition, Korea is a large foreign investor in the investment services sector .Through the
Shinhan Financial Group, investment services have been offered to foreign economies to the tune
of $19.6 billion which has ranked Korean at number 4 of the overall 249 countries under the
world largest investment services companies and country. Moreover, Insurance makes Korea
ranked at position 7 of 249 on the provision of health and Life insurance covers. Lastly, the 10th
largest banking industry and companies in the world is Korea with a sales margin of $ 13bn.
Strategy.
Significantly, the Korean electronics industry has incorporated strategic control process to
conform with the environmental conditions through organizational and structural processes .The

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organizational changes of a multinational are responsive to the economic changes through
strategic control processes. Majorly, economic, technological and political changes have shaped
the day to day operations of the Korean multinationals .Notably, Samsung Electronics Company
has made organizational structures changes based on the abovementioned environmental
conditions. Further, Samsung Company adopted differentiation of products and technological
advancements in all its multinational companies through investing in research and development
initiatives.
Also, The Samsung group has penetrated new markets, namely, in N. America, Europe,
Africa, China and the Middle East. There s been a notable production shift to LDC
s .Structurally, the Samsung Group has a structure based on product division. Due to the
restructuring of the company, the various business divisions such as consumer electronics,
telecommunications into one functioning division (Yeon- Hak and Campbell 1995).
Taiwanese Multinationals
Noteworthy, Taiwanese multinationals have ventured into the hardware and electronic
industries through its Asus Tek Computer Company. Also the Benq Corporation produces
electronics having ventured into the telecommunication industry. Notably, LCD monitors,
projectors are the primary products for the corporation. Taiwanese multinationals have also
invested in foreign investments in manufacturing industry.The Giant is a Taiwanese company
producing bicycles and considered the biggest bicycle manufacturing country in the world.
Specifically, the Giant group has branches in the Netherlands and China (Avril 2015). Taiwan
has various leading globally recognized brand multinationals. Remarkably, Taiwan is among the
world s major manufacturers of steel and machinery. Similarly, the Taiwanese multinationals
like other multinationals have incorporated various strategies to stay afloat in business.

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Production strategies such as integration, vertical and horizontal, concentration both home
country and foreign country and heterogeneous horizontal integration in their operations (Lin and
Lin 2015).
Competitive Advantages
Noteworthy, Korean is an active hub for Foreign direct investment by various
multinationals due to its remarkable regulations regarding foreign investments and favorable
exchange rates .In addition, Korea is a good investment hub due to its strategic location to China,
which is the considered a top investment host country (Mu-Hyun,2017).Primarily, Korean
electronics ,shipyards and power generators have worldwide confidence ,trust and recognition
globally thus having a competitive advantage over other firms operating in the same industry
Technological advancements is considered evolved and attractive in Korea thus the Incentive for
most multinationals to set up in Korean economy due to the readily available technological
advances.
Chinese multinationals exhibit various competitive advantages as compared to other
multinationals and host countries. Noteworthy, Chinese multinationals enjoy the confidence
alluded to its corporate superiority culture notion hence its competitive advantage. Usually,
multinationals have high corporate culture as contrasted with their host countries. Also, most
Chinese multinationals have ventured into research and development activities which has lead to
the production of high quality goods and relatively cheaper costs thus making it enjoy low
production costs which in turn translate to more high volume of quality goods maximizing the
profits of such multinationals as compared to other multinationals and domestic firms with no
competitive advantages (China About N .d)

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Also ,there s the ability of Chinese multinationals to have massive information and
knowledge of the product market stems from the operation of the companies in different
countries hence the ability to keep their products more competitive than the goods or products of
the foreign country. Majorly, Knowledge flow is vital for most market structures globally thus
making the person with the most knowledge of the markets in which he or she operates in work
best to his or her favor .The many Chinese multinationals have provided opportunities for
collection of information which keeps the Chinese products competitive than goods of the
foreign country. Organization learning has been incorporated into the running of many Chinese
multinationals.
Moreover, the Technological prowess of Chinese multinationals has encouraged the first move
advantage in the sense that most Chinese multinationals have patented their products thus
shunning away other multinationals or local companies form copying their way of operations and
production thereby maintaining its competitiveness which has been motivated by innovation
through research and development and benefits from organizational structure(China About
n.d).Through the first move advantage, Chinese multinationals have enjoyed reputational
advantages, confidence and loyalty from their consumers and the ability to set the standard for
their products and services .Lastly ,the first move advantage has made Chinese
multinationals ,cost leaders in their different industries of operations.
Through this advantageous move, the Chinese multinationals have managed to expand their
operations and maximized profits and revenue in home country and foreign country.
Predominantly, Japan is considered to be least endowed with natural resources. However, Japan
is blessed with harbors, temperate climate and rainfall plus pleasant topography thus boosting
agriculture .Also, Japan has ample water resources for energy and industrial supply thus making

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it a destination for foreign investment for renewable energy and nuclear energy for energy
multinationals. In addition, Japanese firms are likely to enjoy low production rates due to the
extensive domestic market available to them. Moreover, their efficient and productivity in the
use of infrastructure which is considered attractive for foreign investment as compared to the
United States of America and Australia which have smaller coordinated public infrastructure
(Riew 2007).Geographically ,the availability of ports and harbors offer cheap transportation
costs for foreign multinationals to invest in thus an incentive for foreign direct investments.
Similarly ,Japanese firm enjoy technological advantages due to the investing in research and
development .It is necessary for global competitiveness to embrace the ever changing
technological changes in order to produce high quality products efficiently and stay
relevant(West 2014).Remarkably, Japanese technological advancement levels are considered
among the top notch technologies of the world thus a competitive advantage(West 2014).For
Taiwanese machinery Firms operate under low production costs thus making it competitive on
the global economy because less production cost translate to more production volumes .Cost
effective strategies have been adopted by most Taiwanese multinationals. Moreover,
multinationals in Taiwan have incorporated research and development in their machinery and
other industries (Wu 2016).
Typically, the ability to maintain low production and labor costs is a advantage for most
companies let alone multinationals. Currently, Taiwanese multinationals have strategized to
invest in low labor cost foreign and regional areas .Also, Taiwanese multinationals have embrace
research and development initiatives for efficiency purposes which has contributed to the smooth
and profitable running of its multinationals(Porter 2001).The adaptive ability of Taiwanese firms
to technological advancements has helped the operations of its multinationals remain competitive

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and relevant .Further, venturing into low production cost foreign countries has made profit
maximization easy for Taiwanese firms.
Asia Pacific Multinationals and the Global Economy, Adaptation and Policy
Largely ,it’s been observed that the behavior and personality traits of Japanese expatriates in
the United States of America exhibit different behavior over time as contrasted with their
counterparts .Specifically ,Japanese managers exhibit concreteness and are more active iin their
learning habits(Yamasaki and Kayes,2007).However ,Japanese expatriates in the United states of
America aren’t assimilated directly into the system but have instead developed various
adaptation modes which have specialized over time. This is an indicator that Japanese or other
Asia pacific multinational expatriates can adapt comfortably over time to foreign policy and
cultural considerations.
Undeniably, change in policies of a foreign country affects the operations of the operating
multinational in that country. Same applies to the European policy decisions on euro zone
multinationals .Following the Exit of Britain from the European Union, could negatively impact
the Japanese investments in Britain (Mcurry 2016).Higher tariffs for the Japanese Nissan
automaker will definitely cut in the profits of the multinational and increase the production costs
for car manufacturing. Additionally ,there will be need to lay off some workers due to the high
production rates of automotives triggered by high tariffs of operation in Britain. Also, following
the exit of Britain from the European Union, Japanese companies are likely to lose market
advantages previously available by virtue of Britain being part of the European Union.
Remarkably, Japanese multinationals have ventured into the European market thus proof
that Asia Pacific countries can do business in Europe and other areas of the world .Noteworthy,

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Japanese banking and financial institutions have established themselves in the European
economy. Since the 1980s, the Japanese companies have flourished in the financial sectors thus
making room for growth globally and internationally(Dayanand 1995).The expansion of the
Japanese banking sector is attributed to the strong financial institution and frameworks in Japan
The existence of favorable macroeconomic factors of the economy has immensely boosted the
growth and expansion of the Japanese banking system in both home country and foreign country.
However, there’s need for more strategies on the global arena to maintain the Japanese
expansion of financial institutions at an international level.

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