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Multinational Companies - Coursework Example

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Multinational Companies

Multinational companies have previously enjoyed the benefits of competitive advantage in the respective markets as a result of their ability to position themselves in the market and exploit resources. However, the values of competitive advantage are under threat as a result of increasing competition, and also the volatility in the market. For example, clothing companies were able to exploit the low cost labour market in some parts of the world, but improved communication links and the Internet have resulted in public outcry over perceived exploitation. The countries involved in supplying these companies have also benefited from the infrastructure and equipment injection which has resulted in an increase in wages. This suggests that the competitive advantage of multinational companies can no longer be guaranteed which has prompted most to seek out sustained competitive advantage.
Sustained competitive advantage is when the benefit of implementing value is prolonged, especially when value strategy is one which cannot be duplicated (van Zyl 2006). This would suggest that more and more companies are investing resources into researching value-creating strategies in a bid to maintain their market positioning and competitive advantage. ...
However, one must also remember that the success of any strategy will be determined by the efficiency and effectiveness of the application of organization-specific competitive resources and the exploitation of the potential capabilities they provide (van Zyl 2006). When one considers the nature or what comprises the organization-specific competitive resources, these would include: financial resources as they determine the availability of resources and enable developments and innovations; physical resources include space and equipment that will enable value to be added to the good or service; as well as human resources which are key to the implementation of any strategy and its success. Other resources would include the intangible resources such as knowledge and the communication networks within the organization that provide added value. This suggests that the process of attaining sustained competitive advantage is one which relies on the longevity of the organization, and not one which can be rapidly implemented.

Leavy (2003) has suggested that the key to attaining a sustainable competitive advantage is down to market position and core competence, which further supports the notion that sustained competitive advantage is dependent on the longevity and performance of the organization. For instance, market positioning is essential when starting and running a business as it determines the organisation's advantage and position within an industry, whilst core competence builds on the organization-specific competitive resources mentioned earlier (Leavy 2003). This suggests that an organization will be able to achieve above average ...Show more

Summary

Examine the assertion that the success of a multinational company depends on exploiting the opportunities and blocking threats in the international markets. This corresponds to Porter's concept of 'environmental fit' that allows the company to improve its competitive position…
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