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Understanding the Key Elements of Multinational Firm Management

Jul 24, 2023 | 0 comments

Jul 24, 2023 | Essays | 0 comments

Managing the multinationals gives a greater insight on the ways multinationals companies and corporate operate in the globalization age. Dowling et al (2009) explains that it is a detailed analysis of the proven control mechanisms applied by the multinationals and incorporates among other issues the strategy and the structure of multinationals, manager’s transfer internationally, expatriates role in subsidiary control and human resource management in international level.

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According to Brown (1991), managing an international business needs various set of conceptual tools compared to the domestic firms. Specifically, it is of great importance to get a deeper understanding and an in-depth insight in fundamental strategic, economic, sociopolitical and organizational issues that have a significant impact on the international expansion of firm process, on the connections between the home country corporate headquarters and the foreign subsidiaries and on the relationship existing between interest groups in other foreign countries and the multinational, firm including labor unions, governments and the suppliers.

From the research done on foreign countries, China proved to be the better placed country to do business with. According to the collected data by doing business, Sethi et al (1974) points out that in starting business in china, it requires simple 14 steps or procedures and takes a maximum of 38 days to register a company. Furthermore, 3.5% of cost on income per capita and a capital pain in minimum of 100.4% of the income per capita is a requirement.

Cullen et al (2009) observes that the new corporate law of income tax in China unified the tax systems in foreign enterprises and the domestic firms and explained clearly the taxable income calculation for the income tax purposes for corporate.

According to Dowling et al (2009), in the business culture of the Chinese, the collectivist thinking way still overcomes including areas trying and experimenting free enterprises. The concept of “saving face” is significant in understanding the Chinese. In the business culture of the Chinese, a person’s social standing and reputation depends on this concept. Loss of composure or embarrassment even unintentionally can be detrimental to business negotiations. So being careful is important  to avoid losing face to someone by criticizing, embarrassing or insulting him or her in front of many people or treating someone with a lesser proper respect deserved due to the status he or she holds in the organization (Brown, 1991).

Management of a multinational firm needs not only adopting the best structure-strategy configuration and realizing the economic advantages, but also getting to understand its subsidiaries’ role played in the foreign country it operates (Sethi, 1974). The local actors for instance the labor unions, government, community and the suppliers do tend to have  a critical eye on the foreign multinational companies because of their exclusive and unrivalled ability to gain economies of scale, develop technology, avoid very high wages, reduce costs of transactions , shift from congested and saturated markets to new and emerging markets, exploit any tax loopholes and apply their power in negotiations with the host governments, local communities, labor unions, customers and suppliers (Cullen et al, 2009).

Welfare of the employees and the labor relations are important concepts that affect the operations of any firm. A firm belief on this antithesis brings out the managers commitment to the course of the employees and union development. It is important to include the CEO’s stand on these issues in the final report given that the daily decisions and operations are done from the CEO’s decisions. However, outlining the policies and the surrounding issues of welfare and labor relations is significant for the future operations of the firm. Welfare includes things done for the improvement and comfort of employees and is usually given above the wages. Dowling et al (2009) observes that welfare helps in motivating and keeping the employees morale high. They include working conditions monitoring, industrial harmony creation through health infrastructure, labor and industrial relations and insurance against accidents, diseases and unemployment of the employees and their families.

Brown (1991) observes the common labor welfare features as the following:

  • It includes services, various facilities and amenities that are provided to the workers to improve their efficiency, health, social status and economic betterment
  • Welfare measures are additional benefits apart from the economic benefits and regular wages available to the workers from the collective bargaining and legal provisions.
  • Schemes of labor welfare are ever changing and flexible
  • The labor welfare measures may be introduced by the government, employees or by social agency.
  • The main purpose of the welfare is to show the whole personality development of the workers to make the work force better.

According to Sethi et al (1974), multinational firms need to appreciate their workers and assist them to succeed. The firm should find out how passionate they are for their jobs or is it for money. Furthermore; the firm should ensure the remuneration is commensurate with the prevailing economic conditions. Moreover, market rates can guide the firm on the payment rate.


Dowling, P., Festing, M., & Engle, A. D. (2009). International human :      Managing people in a multinational context. Mason, OH: Thomson/South-Western.

Brown, S. W. (1991). Service quality: Multidisciplinary and multinational perspectives.   Lexington, Mass: Lexington Books.

Sethi, S. P., & In Holton, R. H. (1974). Management of the multinationals: policies,         operations, and research. New York: The Free Press.

Cullen, J. B., & Parboteeah, P. (2009). International business: Strategy and the multinational       company. New York: Routledge.




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