Identify the four basic strategies that MNCs use and the situations in which they are used. – International Man

Identify the four basic strategies that MNCs use and the situations in which they are used. – International Management, 8e, Luthans & Doh, Pg. 278-280

 

answer:

 

G. Hofer and D. Schendel define the strategy as the fundamental structure of allocating the resources, the present and forecasted resources, their interaction with the environment, and indicates the way it will attain its objectives. and in case of MNCs a efiicient strtergy is one which not only optimizes the use of its resources and operates in economy of scale and yield the maximum profit. To achieve their target there are various stratergies that may be employed by an MNC.

firstlty stability is very important for any firm and hence there is a stratergy known as nuetral strtergy or stability stratergy which basically exisit for large MNCs to find stability. this may take 3 forms

a). profit strtergy aimed at maximizing profit. b) consolidated stratergy which is undertaken in order to stablize their investment position and then c) recovery stratergy which aims at improving fincial performance so as to recover and improve from past period results

McKinsey Global Institute identifies 5 main types of strategy restructuring for the global industry

1. ENTRANCE ON THE MARKET which includes production models from the origin country aiming to enlarge its consumer base. 2.PRODUCTION SPECIALIZATION -producing most of the components in one region and final product in other. 3.PRODUCTION CHAIN DEZAGREGATION -producing each component in the location of least cost and final assembling also in the region where the cost for assembling is low. 4.PRODUCTION CHAIN REPROJECTION – lowering the cost of the whole process 5.NEW MARKETS PENETRATION – entering new market with products having less price to grasp some of the market share and establish itself a good example for this is JIO telecommunication services provided by realise for free of cost for a period of 3+3 months leading to creation of market share for its services in india

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