Multinational companies have continued to increase in the global market. Most of these organizations started as international trade after world war II then have evolved to be among the top MNES. China is a region with some of these first growing MNEs operating not only with the people’s republic of china but also in other developed countries such as Russia, Germany, and Korea Markets. Notably, MNES operate under regulations either set by the host country or defined by international trade within the industry they are operating. Huawei Technologies Co. Limited, a china based corporation based in Shenzhen, is an example of an MNE operating not only in its own country but also in other countries such as Mexico, and the US, among others.
First, many Multinational enterprises have prospered in this changing world. Nonetheless, there are many more failures in globalizing than successes in some of the MNEs. These failures are essentially the result of a misunderstanding of the nature of the global economic transition, particularly the idea that the global economy will inevitably converge to the point of perfect integration. The diversity of business trajectories in organizations’ internationalization operations has resulted in the globalization of markets and production in recent decades. This globalization has resulted in new tactics for businesses and organizations, particularly those who have jumped through the various stages of internationalization swiftly and are thus referred to be “born global” businesses (Micheli & Carrillo, 2016). Huawei’s globalization strategy is built on the company’s technological and adaptability capabilities, which are geared towards local mass telecom markets. In this new era in the sophistication of firms’ globalization strategy, Huawei, a Chinese corporation, is a key actor. The corporation, founded in 1987, is a market leader in the telecommunication industry. Further, Huawei Technologies Limited serves various digital economy areas, including infrastructures for carriers, client equipment, business solutions, and R&D (research and development), supporting the company’s inventions.
Secondly, the global business environment affects most MNEs, whether in the host country or emanating from their country of origin. Mainly, regulations in the global climate are in terms of Foreign Direct Investment (FDI), globalization scale, international competition, and foreign adaptation. For Huawei to excel in most of its host countries, some of these factors in its global environment have been key factors. Other factors that have affected Huawei Technologies in its global penetration to the market in the host countries and some of its subsidiaries include a composition of its boards, compensation of the executive employees in the MNEs, and discipline of the market it operates duality and interbreeding. Finally, its accountability designs such as standards of auditing and accounting information (Luo, 2018). However, Huawei has traded all these regulations in its external environment as an opportunity by ensuring that they accumulate capabilities in those markets, thus emerging to be more competitive and profitable compared to other multinationals in the same industry.
MNEs can transfer and exploit knowledge effectively compared to other external markets. Most of the MNEs can enjoy a low cost of production in the host countries compared to their competitors who could be exporting to those countries. Arguably, despite having some of these competitive advantages, the MNEs are likely to have challenges of own technologies, getting resources and capacity to produce compared to their competitors in the host country. The latter is already established (Sun, 2009). Notably, considering demand and supply of these MNEs is fully rooted in their domestic countries, thus making them have a well-developed infrastructure to enable high production. The demand in other markets helps them reduce some exportation costs by establishing themselves in their demand zones. For instance, the growth of demand in Western Countries made Huawei develop and found themselves in Mexico and the US, among other markets in the West.
In addition, some of these MNES ensure that they have cutting-edge technologies that give them a competitive advantage even in the host countries. Huawei has technologically developed and risen to be one of the most significant applicants in World Intellectual Property Organization (WIPO) patent cooperation treaty (Sun, 2009). Acquiring such rights enabled the company to produce unique products even in the host countries that could not be copied due to the patents, thus giving them an advantage over the host countries. Such enabled Huawei’s revenue to increase in 2008 by 36% to $17 billion, outperforming most of its Western competitors. As a result, Huawei received the first commercial contract globally to deliver equipment for an enhanced “fourth-generation” LTE mobile network in Norway (Sun, 2009). Winning the bid indicated that Huawei had heavily invested in high-end technologies compared to its competitors in the industry both in the host and home countries.
Nevertheless, both internal and external environmental forces have effects on MNEs. Internal factors that impact corporate sustainability (CS) operations may present challenges that may easily be overawed. While external variables may work as catalysts to implement CS, it entirely depends on the host country’s institutional quality and local players’ commitment. Furthermore, clusters of subsidiaries may act differently depending on whether they confront high or low organizational hurdles and high or low external stimuli (Franco, 2021). Further, Stakeholder demands force subsidiaries to strengthen their commitment to sustainability, while organizational limitations hinder such efforts.
In conclusion, companies must oversee and coordinate their worldwide operations using connected strategic instruments due to semi globalization’s implications for business strategy internationally. Companies face internal and external threats from the global environment when operating as MNEs. As in the case with Huawei, competition from the well-established local companies in the host countries has was a hindrance in its early years of operations. Further, regulations in the host country on MNEs become a disadvantage to them, and thus they are expected to work extra harder to be competitive in that industry. However, if an MNE is highly invested in technology, it can get a competitive advantage due to its unique products and services. With the case of Huawei, its cutting-edge technology enabled it to win bids for LTE network supply, giving it a competitive advantage compared to its competitors in the industry. Also, patent rights for the produced goods enable MNE to gain a competitive advantage and fully establish themselves in host countries.
References
Al-Daoud, L. Y. S. (2018). LEGAL PROBLEMATICS CONCERNING WITH THE NATIONALITY OF MNCS. The annals of the University of Oradea, 249. https://ideas.repec.org/a/ora/journl/v1y2018i1p249-260.html
Franco, S. (2021). The influence of the external and internal environments of multinational enterprises on the sustainability commitment of their subsidiaries: A cluster analysis. Journal of Cleaner Production, 297, 126654. DOI:10.1016/j.jclepro.2021.126654
Luo, Y. (2018). How does globalization affect corporate governance and accountability? A perspective from MNEs. Journal of International Management, 11(1), 19-41. https://doi.org/10.1016/j.intman.2018.11.003
Micheli, J., & Carrillo, J. (2016). The globalization strategy of a Chinese multinational: Huawei in Mexico. Frontera Norte, 28(56), 35-58. https://www.redalyc.org/journal/136/13646705002/html/
Sun, S. L. (2009). Internationalization strategy of MNEs from emerging economies: The case of Huawei. Multinational Business Review. https://www.emerald.com/insight/content/doi/10.1108/1525383X200900013/full/html
Maistre, R.L (2009). Huawei Reports 2008 Revenues of $18.3B. Light Reading https://www.lightreading.com/huawei-reports-2008-revenues-of-$183b/d/d-id/667148
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