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MNE: A Business Plan for Successful FDI
For this paper, the MNE will be a company that originates in the United States, but that is considering FDI in Thailand. The company manufactures a snack product that is popular in the U.S. market, but has not been tested in other (particularly Asian) markets at all. This does not mean the product will not do well there, but there is not much research into the suspected success of the product. Nevertheless, the company is forging ahead with Thailand plans. This is noteworthy, because FDI is a complicated process that requires much study and thought (Calderon, Loayza, & Serven, 2004; Ho, 1998). Development in the third world is changing, and so is development in countries that are relatively well-established but that still have some trouble competing when it comes to comparison with countries like the United States (Ho, 1998; Ghemawat, 1986).
In order to be successful, the MNE must be able to move its operation to Thailand or open up operations there that perform well and are a complement to what is seen in the U.S. If the MNE is successful in doing that, there can be benefits for the company and for the host country. Whether the home country will lose out based on jobs sent overseas and other factors is also something that remains to be seen. Many times, the company that sends operations overseas ends up cutting U.S. production to the point that many jobs are lost (Wu, et al., 2002). Still, this is not always the case. Sometimes a company simply needs something to supplement its U.S. base, so it can continue to provide high-quality goods at a fair price. This is the hope with the proposed MNE and its fictional snack product, because that would keep the company from giving away too many U.S. jobs.
Business Plan for the MNE
A successful business plan is one that is designed to protect against as many eventualities as possible. However, no business plan is 100% complete because there are always potential problems that can appear without warning (Porter, 1979). Despite the risk of problems, a business plan for the MNE should be well thought-out and ready for any of the more common issues that may appear. Because the company has already been in business for some time in the U.S. And has a successful product base and an established presence there, it already has a business plan for its company. The consideration here is not how to come up with a completely new business plan, but how to change the existing business plan in such a way that it becomes appropriate for Thailand. There are many factors that have to be taken into account, and there is more than just financial issues at stake.
For example, how is the culture different in Thailand as compared to the U.S. Are there concerns in one country that would not be valid or important in another? How is business conducted in Thailand, and what is expected of companies that are moving into that country? The MNE must thoroughly research the country into which it wants to move, or it will not be able to create a business plan that will be considered successful (Porter, 1979). Each and every business plan created by a company that is moving into an FDI situation takes time, and the company should not be in too much of a hurry to get started in business. Taking the time to address all issues in its business plan will help a company be more successful when it comes to not only the financial aspects of FDI, but also the cultural aspects that have to be considered. Some countries are much more welcoming than others, and it is important that the company find a country that will welcome it and its product. The business plan should incorporate that information.
Costs and Benefits: Home and Host Countries
As with any FDI plans, the home and host countries should be carefully compared with one another from the standpoint of costs and benefits (Hofstede, Steenkamp, & Wedel, 1999). The home country (in this case the U.S.) is one in which the MNE is already established, so that is certainly an important benefit. Additionally, the home country is also welcoming to the MNE and "used to" its presence and its offerings. If the company comes out with a new…[continue]
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