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03/18/2011 03:25 AM
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In The Current Economic Climate, What Is The Strategic Significance Of Asia For Western Mncs? Why?

In the current economic climate, what is the strategic significance of Asia for western MNCs? Why?
First of all, to answer the question it is important to understand what MNC is and what purposes it can have in the business world. To see the strategic significance of Asia for western multinational corporations it is important to analyse economic situation, and all the rest of possibilities that can be exploited to get competitive advantage either in home market or in host market. There will be cleared, that there are certain strategic issues that makes an influence for western multinational corporation strategic decision for making a foreign direct investment. Moreover, the cultural and current economical barriers will be presented for further western companies strategic options. In the end the strategic significance of few Asia areas for western MNCs will be stated and explained, why they are significant at the current economic situation.

To focus on multinational corporation (MNC) strategies it is important to define MNCs definition. According to Dunning and Lundan (2008, p.3), “A multinational or transnational enterprise is an enterprise that engages in foreign direct investment (FDI) and owns or, in some way, controls value-added activities in more than one country.” To understand the purposes of multinational corporations, it is helpful to analyse main activities which lead a company for a foreign direct investment.   Behrman (1972, quoted in Dunning and Lundan 2008, pp.67-68) identified four main types of MNEs activities: natural resource seekers, market seekers, efficiency seekers, strategic asset or capability seeker. These are the main pull factors for expansion; moreover these factors could make a tremendous impact for western company to look for new global market possibilities. Any political, economical, social or technological changes in the home country can push the company management to look for a “tax heaven”, cheaper labour forces, advanced…

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