Multinational Management: A Strategic Approach, Research Paper Example

Abstract

This paper is about the company, Able Corporation. The company is a successful manufacturing company in the United States. It is located in Tennessee and manufactures power tools, lawn mowers, lawn furniture, microwaves as well as ranges. All products from Able Corporation are manufactured locally  and are distributed through large retailers such as Sears, Best Buy, and Wal-Mart. Sale papers are inserted every Wednesday and Sunday. Able Corporation has a successful business throughout the United States and Canada; however it is trying to break through the global marketplace with its technologies, a potential country whose foreign market can benefit from Able Corporation is Thailand. This paper will discuss how it will accomplish that.

Able Corporation

Able Corporation would like to penetrate into foreign markets, introducing its technologies and power tools to various industries. The mission and objectives of the company will revolve around benefiting the Thai market through globalization and the advancement of foreign technologies which the United States can offer. This is seen in their will to penetrate the global market. This can be done through the implementation of American business operational procedures and the training of Thai employees. Organizational structure will define the hierarchy in running the firm; however before this is implemented proper training will be needed (Kohpaiboon, 2010). The organizational structure of the firm will follow a matrix structure which will group employees according to their function and the product. This will reflect on their knowledge and maybe experience in the technological field, if any. Training will come as more costly, although this can be seen as a valuable investment since returns will be optimal.

The information for doing this can be found in an investigation of the global marketplace and Able Company’s potential in increasing sales with its involvement. A list of marketplaces which can open up to foreign investments Able Company can offer will be dealt with. A marketplace which would benefit these new types of technologies and could well utilize them is the Thailand Market Economy. Modes of entry are the methods used for foreign market entry; this is valuable information which Amble Company should consider.  Knowing the unique challenges of entry choices, leaders prioritize by bearing in mind only a few manageable and significant variables first and then taking other variables into account later.  Perhaps the most known method of entry into a foreign nation is exporting.  Although exporting may appear relevant in tangible product only, the contrary is true and services and intangible product (such as intelligence) can be exported as well.

Able Company is a manufacturing company which provides its consumers with products that fall under tools and appliances used in the home. Technology is a worldwide phenomenon across the globe.  Thailand, among other countries, is eager to have access to the latest products regarding technology and appliances. They are seen to import mostly from China and would benefit from having more of a variety in terms of these products, Able Company can provide them with this. The benefits of this mode of entry, which is direct exporting, is the capability of overseeing the distribution more closely and allowing greater control of the entire export operation.  In addition, this mode of entry presents the freedom of determining and selecting, which particular foreign market to enter.  However, the price for this certain mode of entry is quite expensive.  Exporting requires a large amount of investment in many resources and a great deal of efforts, which translates into an enormous amount of funds (Peng, 2009).

The steps to take in order to achieve this goal and to prioritize implementation are to set up an operations plan for the company in its market penetration of Thailand and defining organizational structures. Organizational structures represent how organizations coordinate themselves and the control mechanisms they have established to achieve their strategic goals.  In Thailand there is a chain of command that is embraced by business.  It should also be observed by those foreign to the area when doing business there.  Two topics that contribute to how the structure of an organization should be are how the work will is divided within the company and second how to control the situation after those divisions have been made (Cullen & Parboteeah, 2005).  The operations plan includes the mode of entry; as it was established above, this would be through exports and technology. The Thailand market for technology is very open for foreign investors as it is not one of its strongest markets (Kohpaiboon, 2010). This gives us the opportunity to penetrate the market and offer such technologies which are not available in Thailand; these technologies would benefit their operations and ways of handling business. The proposed firm must establish competitive advantage within the foreign market. Enhancing productivity through technology upgrading is a main key driver in economic growth; developing countries have relied on imported technology through foreign direct investments. The host country can associate inflows of this foreign direct investment (FDI) with a variety of benefits for their economy; the most common one seen are transfers of modern technology and more competitive market products (Kohpaiboon, 2010). Licensing and franchising is an additional choice regarding the mode of entry for Thailand.  In comparison to direct exporting, licensing presents a lower cost in regard to development.  Additionally, this entry mode presents a low risk in overseas expansion.  This option is the most suitable if the organization wants to own the rights in a patent but does not want any involvement in the manufacturing of goods.  Nevertheless, this approach presents some disadvantages.  These drawbacks include little control over technology and advertising, which can lead to creating more competition, and the inability to participate in the global coordination (Peng, 2009).

Consequently, it is vital to understand the company’s mission and objective.  Possessing the knowledge of these factors will serve as a guideline in regards to what and how the company wants to achieve the projected goal.  In this specific scenario, the choice of entry may prove most viable as a partnership with an existing organization in Thailand or an independent operation that employs locals to assist in the cultural exchanges between the United States and Thailand.

Policies within the global market as well as the potential market for investment should be reviewed. The most frequently observed policy which may restrict this is the number of foreign firms already in Thailand as well as the extent of foreign ownership which is allowed (The Nation, 2010). This may come as a problem seeing that Thailand is considered one of the strictest countries when it comes to foreign ownership, according to a report filed by the World Bank (The Nation, 2010). There are certain cross cultural bounds in how South East Asian culture may come into conflict with the American standard of running a business (Kohpaiboon, 2010). This is in terms of piracy in technology and software replication, as well as the replication of patented items without due credit. Studies have shown that perceptions regarding the use replication of a patented product important in the United States, and there are very strict rules when it comes to piracy and the patent of products; however in reference to the Thai market, these beliefs may not be held as valuable in comparison to the United States (Kohpaiboon, 2010). This might come as a problem when introducing new technologies to the country.

The most noticeable cross-cultural factors that should be taken into consideration when entering to the Thai culture are language and behavior.  This is a culture recognized for its collectivizing, traditionalism, and agricultural workers.   As mentioned in the previous paper, Thailand’s economy is mostly driven by agriculture, but they have the potential to grow in other aspects as well. The Thai population is more reserved and formal than American population businesswise.  In American society, the ideal employee is who shines among others, strives for the best, and is independent enough to obtain things on its own.  In Thailand, the ideal employee is who does not seek to shine among others, rather it will work collectively with its team so that no individual is better, and rather the entire team is better.  It is imperative that if an American company expects to train Thai individuals using American learning strategies that these strategies are redesigned to fit the Thai culture.  The language used to train individuals should be the local language, so it is necessary that the trainers are bilinguals so that they can provide the training following American approach but in the native language.

In summary, as businesses look to expand and explore other regions there are numerous factors to consider and obstacles to overcome.  Choosing the appropriate mode of entry between exporting, contractual agreements, joint ventures and wholly owned subsidiaries is just one part of the process (Stonehouse, Campbell, Hamill & Purdie, n.d.).  To make a global endeavor successful, effective management strategies one must take into consideration numerous cross cultural factors that oftentimes play major roles in global ventures.  It has been determined that these barriers can be in the form of languages, cultures, or nonverbal communication.  However, they exist not only in Thailand but also in many places and through a joint effort of all parties involved the proper steps can be taken to disallow such things hinder a business endeavor (Cullen & Parboteeah, 2005).

References

Cullen, J.B., Parboteeah, K.P. (2005). Multinational Management: A Strategic Approach 3rd ed. Retrieved from the University of Phoenix.

Peng, M.W. (2009). Global business. Mason, OH: South-Western CENGAGE Learning.

Stonehouse, G., Campbell, D., Hamill, J., & Purdie, T. (n.d.). Global and Transnational Business: Strategy and Management 2nd ed. Retrieved from the University of Phoenix.

The Nation (2010). Thailand among the most restrictive for foreign ownership. World Bank. Retreived from http://www.nationmultimedia.com/home/2010/07/09/business/Thailand-among-most-restrictive-for-foreign-owners-30133391.html

Kohpaiboon, A. (2010). Foreign direct investment and Technology Spillover: A cross-industry Analysis of Thai Manufacturing. World Development. 14(24).