MALAYSIAN MNCs

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MALAYSIAN MNCs

• ISSUES AND CHALLENGES

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MULTINATIONAL COMPANIES (MNC)

• An MNC is a corporation headquartered in one
  country and having operations in more than one
  country
• EMC Emerging markets MNC MNCs headquartered
  in an emerging market and having operations in
  more than one country, i.e. Malaysian MNCs

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3 state of mind

• Three types of headquarters attitude/orientation
  towards subsidiaries in an MNC
• Ethnocentric
• Polycentric
• Geocentric

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Attitude/orientation towards subsidiaries in an
MNC
Organization design Ethnocentric Polycentric Geocentric
Complexity of organization Complex in home country, simple in subsidiaries Varied and independent Increasingly complex and interdependent
Authority decision making High in headquarters Relatively low in headquarters Aim for collaborative approach between headquarters and subsidiaries
Evaluation and control Home standards applied for persons and performance Determined locally Find standards which are universal and local
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Organization design Ethnocentric Polycentric Geocentric
Rewards and punishments High in headquarters, low in subsidiaries Wide variation, can be high or low rewards for subsidiary performance International and local executives rewarded for reaching local and worldwide objectives
Communication information flow High volumes to subsidiaries, orders, command, advice Little to and from headquarters little between subsidiaries Both ways and between subsidiaries head of subsidiaries part of management team
Recruiting staffing development Recruit and develop people of home country for key positions everywhere in the world Develop people of local nationality for key positions in their own country Develop best men everywhere in the world for key positions everywhere in the world
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Obstacles against Geocentrism
Environmental Intra-organizational
Economic nationalism in host and home countries Management inexperience in overseas markets
Political nationalism in host and home countries Nation-centered reward and punishment structure
Military secrecy associated with research in home country Mutual distrust between home-country people and foreign executives
Distrust of big MNC by host-country political leaders Resistance to letting foreigners into the power structure
Lack of international monetary system Anticipated costs and risks of geocentrism
Growing differences between the rich and poor countries Increasing immobility of staff
Home-country political leaders attempts to control firms policy Linguistic problems and different cultural background
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CURRENT ISSUES AND CHALLENGES OF MALAYSIAN MNCS

• Dwindling global supply of resources
• Rising inflation
• Stag-deflation (combination of stagnation/recessio
  n/depression)
• Great depression?
• Rising unemployment rate
• People-government expectations
• Political tension

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• End.
• Discussion
• Thank you.