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Pakistan: Multinational Companies

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Read the following article and write an analysis focusing on the question below:
•Khan, O.J., & Amine, L.S. (2004), New international business perspectives on Pakistan. Thunderbird International Business Review, 46(5). (AN 14406651).

According to the article, the Musharraf government in Pakistan has firmly backed free market incentives and continued privatization. However, Pakistan remains fraught with numerous pitfalls for MNCs. How might a robust multinational and global market research plan enable MNCs to avoid these pitfalls in Pakistan?

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In accordance with BrainMass rules this is not a hand in ready report but only guidance.

Step 1
The article says that the two leading parties of Pakistan favor free market policies. Specifically the article mentions that the Musharraf government has firmly backed free market incentives and has continued with polices of privatization. The Musharraf government has developed a well established regulatory framework, favoring private and foreign direct investment. Yet there are pitfalls for multinational companies. There is rampant corruption. For expediency MNCs are required to make bribe payments. In addition, the business regulation and laws are cumbersome and mind-numbingly verbose. There are elements in the systems that suggest deviation from the rules and procedures. The strongest challenge that MNCs face while doing business in Pakistan is the pressure to participate in corrupt practices.

Step 2
The first step that robust multinationals should take when entering Pakistan is to stay within official channels. Next the company should establish a reputation for strict ethical conduct. There must be consistency in the approach of the multinational company. Robust multinationals should assert a business culture of their own, consistent with standards in their home country. The demonstration of a clear commitment to resist corrupt practices should eventually yield beneficial results by reducing pressure to conform to questionable patterns of local business.

Step 3
A global market research plan can help multinational companies to avoid these pitfalls in Pakistan. A global market research plan in the ...

Solution Summary

This solution explains how a multinational company can overcome obstacles in Pakistan and perform well. The sources used are also included in the solution.

See Also This Related BrainMass Solution

Case Study: Expanding Business into Pakistan

See the attached file.

While traveling to Thailand on a vacation, you meet Ms. Jenny Chang, an Asian business executive, in the plane. She is happy to learn that you are the international business development consultant for a multinational company. She becomes interested in your expertise and asks you to work as her company's consultant for a project involving new business development in Pakistan. Her company has just invented a revolutionary new CAD system for designing and weaving wool carpets that can improve the design and manufacturing productivity significantly. Several patents protect the unique design of this technological system. The CEO has asked you to formulate a recommendation for how to expand into Pakistan. Your choices are (i) to export to Pakistan from the manufacturing plant in Singapore, (ii) to license a Pakistani firm to manufacture and market the computer system in Pakistan and elsewhere, and (iii) to set up a wholly owned subsidiary in Pakistan.

Select the best of the three choices for Ms. Chang. Support your recommendation by first evaluating the pros and cons of each alternative for Chang's company.

This assignment is analytical in nature. You are expected to demonstrate your ability to convert your theoretical understanding of the modes of international business entry into practical applications. Therefore, I would hope that you will relate all of your answers to the situation in the case or the scene presented and not provide generic text book answers.

Some factors that must be kept in mind to analyze the situation and make your recommendations look practical to your client. As a consultant, you can make some assumptions about the different aspects, such as:

1. What is the nature of the product: brand new high technology consisting of a computerized CAD system. The CAD system that this company wants to promote in Pakistan consists of two major parts: the hardware which is a sophisticated weaving machine, and the software that designs the carpets and runs the weaving machine. How important is it to protect patents and the technology from being copied illegally? How important is the firm's intellectual property? How do transportation costs affect your decision?

2. Where is it being manufactured now: Singapore. What is the level of manufacturing sophistication in this country when compared with the target country?

3. What is the nature of the target market: What are the relative business barriers in the two countries? Demand? Economic development? Legal system for resolving disputes?

Patent protection laws or enforcement of the law? Availability of skilled engineers and workers? Availability of suitable agents or partners?

The consideration of the above factors will allow you to produce an excellent report for Ms. Chang.

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