Discuss How the Choices of Multinational Enterprises (MNEs) Concerning the International Strategy and Structure are linked, and Evaluate the Usefulness of the Global Matrix Structure in an International Business Environment
Multinational enterprises (MNEs) often have a myriad of choices while opting to expand into the international grid. Most of these choices attempt to conform to the complex patterns within the international business environment. The Multinational choices in most cases peg on various strategies spanning location choice, mode of entry into the international market, risk mitigation strategies, budgets, and research play an integral role in determining the success levels of global expansion. Relatively, businesses consider the international business structure as a significant concept in their expansion into the international business environment. The international business structure mainly hinges on factors such as human resources, marketing, finances, and operations among others (Peng & Meyer 2016). The complex network and nature of the international business matrix seem to depict a link between the strategic choices made by multinational enterprises and the related structures. The two components thus present a global matrix structure comprising of interrelated strategies and components. As such, this paper focuses on the manner in which the choices of the multinational enterprises regarding strategy and structure are linked. The paper further delves into the usefulness of the global matrix structure within the international business environment.
How the Choices of Multinational Enterprises (MNES) Concerning the International Strategy and Structure are Linked
As articulated above, the choices of multinational enterprises concerning international strategy span location choice, mode of entry into the international market, risk mitigation strategies, budgets, and research. These strategic factors determine the efficiency and success of business within the global context. The international business structure, on the other hand, depends on factors such as human resources, marketing, finances, and operations among others (Peng & Meyer 2016). The above mix constitutes variously related variables that work together towards ensuring the success of the business. Below is an analysis of the manner in which the two factors articulate to form a strong global matrix structure.
Entry strategy constitutes a major approach to international business marketing. The entry mode determines the future performance of the company and its ability to penetrate the market. According to Dunning (2014), the choice of entry mode into an international market constitutes a significant decision made by the company managers. The selected entry mode approach is a major component for determining the magnitude of control the firm will exercise on its businesses abroad. Verbeke and Kano (2016) pointed at two main foreign market entry strategies mainly involving transferring of resources such as business knowledge, technologies, new brands, and capital among others that are combined with the country’s resources to produce the new product in the host country. Another approach involves exporting the products into the foreign markets and gradually establishing their presence. The implementation of the above entry strategy strongly depends on the finances and marketing strategies to successfully roll out within the international business environment. The study by Dabic, González-Loureiro, and Furrer (2014) noted that marketing is highly crucial in creating awareness regarding a new brand in the market. The international business managers need to initiate marketing campaigns to ensure that people in the new business environment develop knowledge of the product and realize its significance in solving out their problems. Through market profiling and segmentation, the international business managers may develop a marketing strategy to ensure a smooth entry into the given international market. Finances also play a major role in the international market entry. The multinational enterprise requires funds to enable them to expand into the global market (Cavusgil et al. 2014). The finances enable the distribution of resources and support of the marketing campaigns to increase knowledge of the MNE activities. It is therefore evident that the entry strategy strongly depends on the international business structural elements of finances and marketing thereby depicting the link between the two.
Another strategic choice for a multinational enterprise is the location. Shin, Hasse, and Schotter (2017) in their study noted that location is a core influence on both exports and imports. Shin, Hasse, and Schotter (2017) noted that location determines the ability of the multinational enterprise to freely import and export their products back and forth the host countries. The international business structural components largely influence the extent and volume of exports and imports within the global business environment. The good location ensures easy transportation and delivery of the imports and exports. The ease in transportation lowers the operating costs and the finances needed for the transition into the new host county. Buckley et al. (2016) also noted that the location of the multinational corporations influences their abilities to engage in foreign direct investments, where the enterprise invests in the company through ease in the allocation of resources and structures. Teece (2014) also noted that businesses operating in similar niches might also provide insight on the impacts of location on business performance. The level of exports and imports in similar businesses operating within the international levels could be used in predicting the performance of the new multinational enterprise within the business environment (Peng & Meyer 2016). For instance, Pepsi Co can use the levels of import and export for other beverage companies as Coca-Cola to predict their performance in the new business environment hence determining their entry strategy. The above propounding strongly points at the link between the choices of multinational enterprises strategies and the structures. Each component from both sides depends on each other for sustenance and propulsion of the business to greater levels.
The research choice of the multinational enterprises also determines their levels of performance. Research determines the level of knowledge the international business managers possess regarding the prospect market. The choice to research the performance and operations of similar multinational enterprises has a strategic influence on the performance of the business. The research outcome and findings determine the marketing strategies used in promotions, the budgetary allocations made for the international expansion, the amount of human resource allocation required, and the levels of operations. The study by Marano and Kostova (2016) articulated that research provides knowledge on the strengths and weaknesses of the host country. It enlightens the international managers on the viability of the global expansion and positions them into making sufficient budgetary allocations for the expansion process. A similar observation was made by Hood and Birkinshaw (2016), noting that the research provides crucial information such as ideal budgetary allocation and other significant information regarding operational costs within the business environment. Equipped with this information, the multinational managers may make proper decisions regarding the new international venture. Political, social, and cultural factors are equally revealed through research. Many factors such as the social norms, religious beliefs, political alignments and affiliations, and the cultural beliefs within the given country are highlighted through research and therefore determining their selection of the human resource, allocation of resources, product choice, and marketing strategies (Story et al. 2014). The above finding fulfills the articulation by Forsgren (2017)that research into the foreign market equips the business managers with the information regarding what to do and what not to do while acting across distinct po
litical, economic, and cultural boundaries. For instance, in case eBay intends to expand into other international markets such as India, they would conduct research and delve into the experience of other existing players in the target market such as Amazon to determine their success levels. The performance of related players could help predict their success or failure in the international market (Buckley and Casson, 2016). The elements in the research choice strategy relate with the structural factors such as marketing, human resource selection, finances, and the overall operations of the company within the foreign market.
The objective of this segment aimed to discuss the manner in which the choice of multinational enterprises in regards to international strategy links with the structure. Three strategic choices have been discussed spanning location choice, market entry choice, and research choice strategy. Besides, the study identified the major structural components within the international business environment. The components of both the multinational enterprises’ choices and the multinational business structures exhibit great interdependence in their interactions (Vigneau, Humphreys, and Moon 2015). Elements such as choice of location directly relate to the financial, marketing, and the operational components of the structure. It is thus worth concluding that the two parts are linked and interdependent. The complex matrix structure enables the integration of the ingredients to ensure the success of the multinational venture in the new business environment.
Usefulness of the global matrix structure in an international business environment
The above analysis presents a global matrix that integrates both the strategic and structural perspectives of Multinational Corporation. The matrix shows the relationship between the various comments and their significance. Through the information, the MNEs tend to benefit from the matrix information and the international business managers utilize the information to enhance their success in the new business environment. Below are some of the usefulness accrued to the global matrix structure within the international business environment.
One of the importance of the global matrix structure is the ability to recognize the complexities of the international business environment. According to Egelhoff and Wolf (2017), the matrix provides the geographical, technological, political, and social functionality of the business, hence enabling the international business managers to make proper decisions on the best and most productive approaches. For instance, in case eBay intends to venture into the African market, the company would look at the matrix from the geographical, technological, and economic perspectives and make decisions on the viability of the venture. Francis, Owyang, and Savascin (2017) noted that the matrix structure provides the real market scenario and the interacting components. As such, decisions are easily made on the strategies to be adopted.
The complex nature of the matrix structure presents high levels of internal complexities that make the managers take stringent measures that would enhance success within the business environment. Calabro et al. (2016) pointed at various management challenges faced by the matrix structure to include management of employees, cultural differences, social norms, and political factors within the business environments. Mendenhall et al. (2017) also pointed out that the ability of the matrix to reveal the impeding challenges makes it ideal as the managers can plan and ensure sufficient control measures to curb the market risks. The multinational companies also use this approach to determine the viability of the international expansion and justify the expenses.
The matrix structure also ensures improved coordination and communication within the enterprise. The interrelationship between the components makes it easy to understand the organization processes. This makes it easy to coordinate activities and put in place proper controls and restrains to enhance productivity (Wach and Wehrman 2014). The increased coordination and communication ensures smooth flow of activities, leading to the simplification of the logistical approaches. The logistical approaches thus ensure that the product meets the required quality, and the products arrive at the market within the stipulated time (Chaney 2014). This increases reliability and dependency of the product within the international environment.
The matrix structure also ensures the formation of prompt decentralized decisions. The decentralization in the matrix structure delegates the managers at different organizational levels the authority to make decisions and act within different capacities (Abdallah 2016). The approach ensures that easy decision making since the managers does not engage in several consultations. Besides, the decentralization element ensures that the employees are equipped with skills necessary in various levels of management. The above benefits ensure that the international businesses experience exponential growths within the business environments. Thus, the global matrix structure is useful in stimulating business growth through the identification of risks, challenges, opportunities, and improvement of coordination and communication within the company processes (Peng & Meyer 2016). By presenting universal imminent difficulties in the international business environments, the global matrix ensures that the international business managers are equipped to counter the challenges emanating from the international business environments (Hooper 2016). It also provides insight for venturing into other international markets leading to improved performance and expansion into other countries around the globe.
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