The Multinational Enterprise in Global Production and Trade Networks

This essay explores the integration of global markets and its impact on multinational firms in the food and beverage industry. It discusses the concepts of globalisation, global marketing, global value chain, and global production network. The essay also highlights the challenges and opportunities faced by the food and beverage sector in the global market.

The Multinational Enterprise in
Global Production and Trade
Networks

Table of Contents
ESSAY.............................................................................................................................................3
REFERENCES................................................................................................................................4

"Has the integration of global markets led to the disintegration of the multinational firm as
the main coordinating unit of international production?" Answer in reference to one industry
of your choice.
ESSAY
Globalisation refers to a process in which integration and interaction of people,
companies and government takes place. The process of globalisation is on rise since 19th
century. The rise in globalisation majorly began when communication and transportation were
developing. Global integration is an important term which explains the degree to which an
organisation can effectively use similar products or methods in all different countries where it
operates. The organisations in today's era are required to work on various countries and make
sure that they are fulfilling the needs and requirements of the consumer. Due to difference in
culture and beliefs the offering of company have to be moulded according to need of people. It
can be often seen that when organisations wants to keep the production system within their
control they can take decision to produce in foreign or in domestic country as well (Asmussen
and Fosfuri, 2019). Production at home refers to standard integration and that in foreign land is
called foreign direct investment. Coordination between organisations production system is not
seen as the businesses are wanting to own production system rather than outsourcing it to earn
high profits. When these businesses are spending on their production system in foreign lands
they have to compete with a number of competitors there. The competition is increased as they
move global from local. Due to this co-ordination between production system becomes difficult.
The food and beverage industry includes a number of different concepts that are cafeterias, fast-
food joint, food manufacturers, catering business and so on. It is a huge industry that include all
the functions from packaging, producing, transporting and serving food and beverages. The
globalisation of food and beverage industry have been taken into consideration from a long time.
There are a number of food products that are sent and received between countries due to its
scarcity in some regions.
Global marketing is a marketing on worldwide scale that reconciling or taking the
commercial benefit of global operational difference, opportunities and similarities to meet the
global objectives (Backer, 2018). The globalisation consists enhanced interdependence and
integration of global economy. This means that there will be rise in trade and enhance in
movement of labour. The economic integration is agreement between nations that mainly

consists minimization as well as elimination of the trade barriers and coordination of fiscal or
monetary policies. In regards to this, richest country purchase the raw materials from poorest
countries. If the each country produces only own requirements then manufacturing and
consumption of products could limited. Food and Beverages industry is largest production sector
in United Kingdom. In context to economic contribution, this accounts for the 17% of UK
manufacturing. The global integration is degree to which firm enable to use similar goods as well
as methods in some other countries (Horner, 2017). The local responsiveness is degree to which
an organisation should customize their goods or methods to meet with situations in the other
countries. In context to global integration, 19th century saw the substantial advanced in the
international market integration and creation of world economy. The steamships connected to
ports to the each other in world. Fell down in freight rates and product could be carried across
world to more distant markets and still not expensive in faraway places than similar products
manufactured locally.
Trade plays a necessary role in driving the growth in private sector a creation of jobs that
assist in minimizing poverty and enhancing incomes. The physical changes in minimizing cost of
freight as well as transaction were not forces stimulating the market integration. Through
supporting development and growth in all around world, Trade has been proved as necessary tool
in tacking the poverty. This was normal for the countries to be impose the import duties on the
foreign products, and seeking to gain gold inflow in foreign trade accounts through selling more
goods of trading partners than they mainly bought from. In year 1846, Manchester merchants
struck famous victory for the free trade through forcing British government to be abandon tariffs
on imported products other than the luxury products. Tariffs on the wheat were go firstly,
opening Great Plains of United Stated for the production of wheat to supply in Britain. With the
free trader, there is no longer trade relations with foreign country have to be in surplus or
balance. After this, Britain moved into the deficit on the trade account but it was retained through
invisible flows generated through substantial overseas investment mainly in railroad system of
United States. On the other hand, policies of the open market became dominating principle that
extended by much British empire. United States retain the import duties and after the short time
period of the trade liberalisations many European countries returned to protectionism so new
production sectors should be safe from competition of the cheaper products from Britain. Each

country could be specialised in manufacturing products which were better endowed through
nature to be produce and exchange them for other goods they required.
Global value chain defined as activities as well as people who are involved in production
of products as well as services along with the distribution, supply chain & post-sales activities
that is conducted and coordinated beyond the geographic boundaries. It is determine that global
value chain is similar to the industry level chain as it perform operations at global level. It is
determine that the concept of value chain is used to evaluate the international trade within the
global value which comprises broad range of activities and operations which is needed in order
to bring product from its concept via sourced raw materials as well as intermediate inputs than is
transform as an output for the final customer. global value chain is consider as one if the
effective and influential framework in order to perform operations at global level. In addition to
this, such concept is new as in earlier the same phenomena were remembered as international
production networks, supply chains, commodity chains and so on. It is analysed that such
concept has take place when the discussion of impact of globalisation started and can be
undertaken to be highly encompasses then other related context. One of the main advantage of
global value chain approach is that the growth of economic activities are consider in relation of
markets and resources that is of local, international and regional economies. One of the major
aspect of global value chain approach is it directly anticipates integration as well as competition
in the world economy. Moreover, it involves the amount of competition in products that has
presence at an international level. There are various issues involved in global value chain
approach that is issue of power that results into distributional issues. In relation to food and
beverage industry, it has presence in all over the world and adoption of such chain assist in
improving supply chain at a global level. In addition to this, it assist in implementing all the
operations as well as activities in more effective and systematic manner. Furthermore, it help in
gaining insight about competitors prevailing in the world economy due to which it gain growth
and development. It is significant for Food and beverage industry to use such king of frameworks
as it help in performing operations at a regional, national and international level as well.
Global production network is basically an interconnected nodes which extend across the
geographical boundaries In addition to this, it integrates elements of national as well as
subnational territories. It is determine that global national networks combines an element of
global value chain analysis along with the varieties of capitalism. Along with this, global

production network provides a relational approach which main aim is to encompass all the
factors that is involved within the production systems. In the era of global competition and
decline in profit margins, logistics provide an additional opportunities that improve the ability of
production via effective distribution strategies. It is determine that global production network are
mainly accounting for active and emerging branch of research of different paradigm of
globalisation. There are various issues involve with the globalisation term that is production,
economic interdependencies, trade as well as consumption which are the core factors of global
production network. If it is taking about the food and beverage industry, global production
network plays an important role as it interconnect with them to other countries and at global level
as well. It is analysed that such theory assist food and beverage industry to maintain demand and
supply as it involve the needs of customers in order to be at right place, in right quantity and in
right location that has direct impact on the growth and development of such industry in a positive
manner. The development if global production network directly leads towards the substantial
growth within the flow of parts, commodities and finished goods as well. There are mainly four
strategies in order for global production networks. The first strategy in relation to food and
beverage industry is centralized global production that arise within a particular nation and after
that it is exported to the international market. This strategy is mainly applicable to the activities
which are difficult in order to relocate and also difficult to reproduce. The second strategy is
regional production that raise in each region which produce foods with the size and availability
of production system and also associated to the size of regional market. The third strategy is
regional specialization that consist of a special division of production based on competitive
advantage. For this, it is significant that each and every region has to be specialize within the
production of particular goods & imports from other areas when it needed. The last strategy is
Vertical transnational integration that sates various stages of production occur at locations that
offering effective and best comparative advantage in relation to availability of skills, labour and
cost as well. From the above discussion, it is analysed that both global value chain theory and
global production network theory assist food and beverage industry to implement activities as
well as operation at a global level. In addition to this, it also help in gaining insight about level of
competition prevailing at global level due to which effective strategies were developed and
attainment of competitive advantage take place in an effective manner.

Food and Beverage sector form a necessary part of the many economies. This has to be
witnesses the phenomenal development because of factors for an instance enhancing population,
streamlined production process, technological advancement and improvement in cold chain
facilities. This sector is customer driven with multi dimensional network. In context to the supply
chain transparency, consumers know everything regarding provenance of goods and process of
manufacturing. It has been compelled firm to make improvement in visibility of supply chain to
sustain consumer base. Since 2009, European food and beverage exports are mainly developing
causing enhance trade surplus. One quarter of the exports ate mainly sold to the non- European
countries with rising trends. Import market share of fish and seafood, oil and fats, vegetables
and processed food totalled 16% (Gupta, 2017). In context to global comparison, EU is one of
the leading exporter as well as the second importer of the good and beverages goods in all over
world ahead Brazil and China. This number mainly visualise significance of food and beverage
sector of EU in context to employment and turnover. Since year 2100, turnover of the organic
food and drink goods in Germany has annual growth up to 11%. around 38.259 manufacturers,
imposters and processors were employed in organic industry in year 2015. In context to this,
revenues of European organic food and drinks doubled in the last decade and recording
development rate of 8% in year 2014. On the other hand, at present crisis related to the food
safety have developed more concern between customer and their perception has been evolved to
high awareness and minimize certainty that led to less confidence. It is necessary to this sector to
assure that customer is been provided with safe goods processing needed sensory characteristics
on affordable cost. Food safety is main economic and public health issue both for the food
consumed. Hence, food and beverage industry has clear responsibility and interest in addressing
all challenges related to food safety (Ryan and et. al., 2020). Through food and beverages
industry determine the packaging performance as necessary and internal part of goods, general
attitude lean for keeping the packaged cost minimum. Packaging is intended as support for
carrying the regulatory information and also the mandatory performance as well give the anti-
tampering. Other than this, purposes are let consumers better perceive the messages that induced
at choice moment. Issues are disposable to single use packaged that cause waste issue. This
appears that adoption of the advanced technology is limited in solutions to food and beverages.
They are mainly reserved to particular as well as demanding niches. Organisations in food and
beverages are looking with more interest to introduced the paper like finished material of

packaging as this appears to satisfying the solutions to provide consumers better feeling of drink
or foods genuinenesses they mainly demand.
The integration is helpful in developing linkages among the national economies better. In
regards to this, there are some changes occurred in food and beverage industry due to the global
integration. From the past decades, there are some changes in rules and regulations in food
industry by government. Other than this, technology is advanced and this is beneficial in food
processing. There is predicting and monitoring behaviour as well as the emerging biological
hazards. The food and beverage sector predicting and also monitoring behaviour and emerging
the chemical hazards consisting toxins of the biological origin (Dawley, MacKinnon and
Pollock, 2019). There is a risk advantages assessment as well as communication to different
stakeholder of food chain. In the present time, advanced in the ecomic systems and technology
give new tools to target the challenges. The microbial activities may deciphered for particular
microorganisms at molecular level that leading to novel and also improved predictability of
toxins production, spoilage capacity and virulence factors. This will be necessary to understand
as well as predict the interaction with ecosystem. Managing the risk in processing and safety
hazards, sales and distribution. Management of the food- borne hazards as well as threats from
the definitive information availability on particular hazards. In this manner, food and beverage
sector is developing day by day and provide its contribution towards economy of country.
Coordination is a process of managing dependencies among functions or activities. It is a
key concern of for economic analysis It is not a simple task for any firm because it consist each
and every international company consist multiple plants in different countries. Due to this some
of they are facing problem for building connection. This affects their global production which
hinders agility and performance whereas other uses this as a formidable advantages. For
Coordination, food and beverages company requires to link and integrated their plants to support
their strategies business objectives. They can coordinate with other international firms by using
several patterns like M&A, joint merchant , partnership etc. M&A means mergers and
acquisition. In which organisation describe consolidations through various types of financial
transactions, purchase of assets, management acquisition, tender offers etc. in M&A, one
company purchase the other outright in which the acquired firm doesn't change their legal name
and structure in order to build coordination with other company. But it is owned by parent

company. Mergers is a combination of two firm or coordination in between two firm for
investment.
BOD for two organisations approve combination and seek shareholders 'approval'. After
that acquired company ceases to exit and become a part of acquiring company. In context of
food& beverage company findus group & two sister food groups are merging their firm for form
co-ordination. Companies coordinate through consolidation also in which it creates a new
company through combining core business by abandoning old firm structures. While planning to
coordinate with other firms at international level different types of options could be focused by
the entities (Landesmann and Stöllinger, 2019). These are partnership, acquisition, mergers and
joint ventures. With the help of all of them, the organisation will be able to coordinate with all
the other firms that are operating business at international level. The global market has led to the
disintegration of multinational firms as there are various types of barriers are available in the
market. If all of them will not be dealt in systematic manner then it may result in issues in the
operational activities. It is very important to deal with all the problems in systematic manner so
that the disintegration could be resolved. By coordinating the international production the firms
will be able to deal with all the issues that are taking place because of disintegration. If the firms
will not be able to find the options for coordination then it will be very difficult for them to carry
out operations at international level. Apart from this, it will leave impact upon the international
production. Hence, if the firms are willing to maintain international production then it may leave
impact upon operational efficiency of the entities (Enderwick, 2018).

REFERENCES
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