INTERNATIONAL BUSINESS Essay Example | Topics and Well Written Essays - 2000 words

INTERNATIONAL BUSINESS - Essay ExampleThe regions that harbored this icon shift argon the United States, Japan and Europe which have been deemed as the Triad. After establishing a hefty industrial base, many corporations in this region have expanded globally, particularly dispersing operations across the earthly concern w present economies of scale could be achieved in a cost-effective manner. A main feature of the past a few(prenominal) decades has been the shift from craunch intensive industries to capital intensive industries, consequently, labor activities have been shifted to less developed regions where labor cost is law and there is relatively less restraint posed by labor regulations. (Ohmae, K., 1983) trance some scholars deem this transfer of functions as neo-colonialism, since most of the profits gained by virtue of these activities be diverted towards the operating MNEs, our focus remains on the peculiar relation between multinational enterprises and small-medium enterprises that operate locally. Since Greenfield ventures are a rarity in the current sociopolitical environment, trade activities are spearheaded by focus on economic consumption of factors of achievement, in particular, labor. Most of the major global corporations make use of outsourcing, delocalizing certain operational functions to push their be down. This symbiotic relationship is possible due to particular philosophies that are distinct to the two major players here MNEs have a focus on product innovation while local SMEs have a focus on process innovation. MNEs provide the financial and technological capital required, while SMEs facilitate production with an optimal production process. Inevitably, the SMEs, which are mostly situated in LDCs, are forced to specialize in the particular function that they are catering to. MNEs provide SMEs an opportunity they wouldnt otherwise have in the form of markets that demand products requiring their services. It is usually the lack of local demand that inhibits many SMEs from growth and expansion. This nonion is in addition supported by Porters diamond model, which suggests that in order for an industry to flourish in a national context, the local demand must be anticipatory of foreign demand. Since such is not the case in most LDCs, MNEs provide an opportunity for SMEs to expand and grow by increasing volumes of operation. pictorial matter to newer markets is also accompanied by the advent of newer technologies, capital and managerial skills.( Wright, R, W., & Russel, C, S., 1975) This in turn not whole effects the SMEs in contact, but the local community involved as well in price of employment. Ironically, the necessary technological capital required for SMEs is provided mainly from the Triad region. This obviously entails a certain monopolistic relation that is a feature of MNE-SME cooperation. What is deemed as an inequality, automatically translates to social indicators and economic factors as well. Some scholars guess this relation as the dependency theory, which states that countries within the core are capital intensive nations that are fit to maintain this superiority using their vast accumulated capital which focuses on innovation and technology, while lesser important functions are transferred to the peripheries which provide the necessary labor and raw material for industries to operate but are not allowed to accelerate beyond that. Lack of knowledge transfer is