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MNC International Expansion - Comparative Analysis

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As part of its international expansion program, Acme, a U.S. multinational enterprise (MNE), is currently in the planning stages of establishing a greenfield (see text glossary for definition) production facility overseas. You have been asked to present a proposal to the steering committee comparing the advantages and disadvantages of starting operations in one of two selected foreign countries.

The steering committee has determined that one alternative must be a member of the European Union (EU) while the other cannot be a member of the EU. Subject to these conditions, you may choose any two foreign countries, except China, Czech Republic, and Romania for comparison.

Deliverable: There are many factors to consider in your comparative analysis. Please be sure to include, among other topics, a discussion of the different countries' currencies, trade policies, and cultural variables that may affect operations and profitability in each country. Your report should conclude with a recommendation and supporting rationale as to which country should be selected for the new facility.

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MNCs like Acme have the following advantages :

Resources. Building a complex commercial infrastructure for the bottom of the pyramid is a resource- and management-intensive task. Developing environmentally sustainable products and services requires significant research. Distribution channels and communication networks are expensive to develop and sustain. Few local entrepreneurs have the managerial or technological resources to create this infrastructure.

Leverage. MNCs can transfer knowledge from one market to another from China to Brazil or India as Avon, Unilever, Citigroup, and others have demonstrated. Although practices and products have to be customized to serve local needs, MNCs, with their unique global knowledge base, have an advantage that is not easily accessible to local entrepreneurs.

Bridging. MNCs can be nodes for building the commercial infrastructure, providing access to knowledge, managerial imagination, and financial resources. Without MNCs as catalysts, well-intentioned NGOs, communities, local governments, entrepreneurs, and even multilateral development agencies will continue to flounder in their attempts to bring development to the bottom. MNCs are best positioned to unite the range of actors required to develop the Tier 4 market.

Analysis of EU
The European Union which is based upon a community of 25 independent states has an area of 3,892,685 km with an estimated 460 million citizens as of December 2005. If the EU was a country, it would be ranked 7th in the world in size and 3rd in the world in terms of population. The EU's main objectives are to strive to enhance economical, political and social co-operations. In 2004 the EU had the top notched economy in the world with an estimated GDP of $12.48 trillion with an increase in trade surplus. However, recently the EU has been suffering in economic growth as well as an increase in unemployment.
Date of foundation: 1st November, 1993.
Member states (EUR: Euro currency):

* Austria (EUR), Belgium (EUR), Denmark, Finland (EUR), France (EUR), Germany (EUR), Greece (EUR), Ireland (EUR), Italy (EUR), Luxembourg (EUR), Netherlands (EUR), Portugal (EUR), Spain (EUR), Sweden, United Kingdom of Great Britain and Northern Ireland

Ten countries have joined the EU on 2004-05-01:
Cyprus (Greek part), the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia.

(Wikiepedia)

Thoughts about country analysis

THE PURPOSE OF THIS ANALYSIS IS TO EXPLOIT OPPORTUNITIES AS WELL AS IDENTIFY RISK DRIVERS SUCH AS: SOCIAL/CULTURAL, POLITICAL/LEGAL, DEMOGRAPHICS, ECONOMICS, TECHNOLOGY AND INFRASTRUCTURE IN ORDER TO SELECT THE COUNTRIES FOR EXPANSION

Driving ...

Solution Summary

As part of its international expansion program, Acme, a U.S. multinational enterprise (MNE), is currently in the planning stages of establishing a greenfield (see text glossary for definition) production facility overseas. You have been asked to present a proposal to the steering committee comparing the advantages and disadvantages of starting operations in one of two selected foreign countries.

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