Multinational Corporations 

Multinational Corporations

Introduction

Multinational corporations refers to businesses and firms that have their operations in more than one country. They operate both locally and internationally to provide goods and services globally. They conduct a significant proportion of operations and existence in other countries; thus they can influence the economies internationally (Khanna, Palepu, & Sinha, 2005). The paper will use the examples of Huawei Technologies Corporation Limited and the Tencent Holdings Limited to give advice to multinational companies in support of the claim that the economies in the world are becoming borderless and international relations are changing and so are the multinational companies experiencing change. Huawei Technologies Corporation Limited is a leading global information, communication, and technology (ICT) solutions provider that deals with the development, supply, and marketing of communication devices such as mobile phones and computers (Micheli & Carillo, 2016). Tencent Holdings Limited is a worldwide recognized investment company. It is engaged in the provision of mobile value-added devices, internet, online advertising, and e-commerce. It is based in China but has networks across the world. Tencent handles social media services, e-commerce transactions, and gaming. It also sales software and provides trademark licensing (Qingqing, 2017). Both companies have experienced changing economies as they expand to reach global markets and thus require to develop strategies that would enable them to stay focused on their purpose.

Multinational Corporations should modify their Business Models

First, multinational corporations should adjust their business models for each nation they operate in. A business should have its structure that defines its management, response to change, and their mode of operations. Most firms have laid down strategies on how they approach markets to remain focused and make profits. However, as multinational companies grow borderless and expand to new locations, they have to change their business models to fit and match with the existing companies in the foreign country (Khanna, Palepu, & Sinha, 2005). For example, the political environment may be different, and thus the company has to comply with the requirements of the international state for them to operate favorably and without clash with the authorities. They have to change and adapt to the country’s product markets and customer requirements. However, though changing the model is critical, a company must maintain its core business values and propositions even when operating internationally (Khanna, Palepu, & Sinha, 2005). If a multinational company makes changes that are radical and may affect the business, they may lose their advantages of the international scale and global branding.

A multinational company such as Huawei has expanded its markets globally and thus needs to modify their models in each nation they operate in. Every state has a different market demand, and Huawei must extend new markets by developing a new breed of products and services depending on the global markets. The company will need to create and promote high-end products that are associated with superiority to fit the global competition. Many ICT companies such as Apple have entered global markets and thus for Huawei to survive, it has to reimage their business model (Micheli & Carillo, 2016). Changing the void may involve nurturing their staff into an immutable resource, thus becoming successful change agents, thus giving Huawei a sustainable and prolonged competitive market advantage.

Additionally, Tencent Holdings Limited has become China’s big bet in 2019. The company has a business model that focuses on consumers and investors. Their operations have been successful in China, and thus before entering a new market, they should consider changing some aspects within their model to match that of the country they are operating in. Tencent prioritizes WeChat and its cloud business, thus becoming China’s top enterprise that uses these services to connect with clients and analyze data. With these strategies, Tencent has drawn so many businesses in WeChat, making them successful in the market (Qingqing, 2017). The platform is also being used by swaths of Chinese executives and other professionals instead of using official emails. Tencent has successfully established itself in China. However, as they go borderless, the economies have changed, and many online chat platforms such as WhatsApp have come to the market, and they are gaining influence. Therefore, whenever Tencent is going globally, it should consider changing their model regarding products and selling strategies to ensure they compete favorably. They should never assume they will be received with the same enthusiasm as they have in China. Tencent has a competitive advantage as compared to other investment companies operating globally (Qingqing, 2017). They have cloud, which offers the opportunity to customize their services for different economic sectors such as banking. Therefore, to change their model is easy because of the availability of the cloud. Therefore, they should use their existing models and where possible, modify them to fit with the global markets.

Multinational Corporations should Change the Contexts they operate in

The other advice given to multinational firms is that they should alter their operational contexts. A business is defined by the products and services they offer in the market. With the companies going international, the contexts can cause dramatic changes in the local market. Therefore, they should ensure they maintain the brand both locally and globally to compete favorably and remain committed to their service terms. Companies should tune in to changes in response to external forces. For example, when their products gain high acceptance in the global environment, the firm should respond by changing the local product so that the standards remain the same (Khanna, Palepu, & Sinha, 2005). Again, multinationals should adapt to change to react to external influences. Both tuning and adaptation results in gradual changes that may influence the markets.

Huawei technologies has embraced change as a way of getting market opportunities. For example, they have embraced technological changes to fit with the global demands and produce devices that compete with other ICT machines in the international market. They keep on advancing their mobile devices and computers to provide solutions to their customers. The strategy has helped Huawei gain influence and recognition in the international markets (Micheli & Carillo, 2016). Technology is advancing, and Huawei has kept up with the pace by moving with speed to ensure it remains relevant and focused on producing products that match the internet demands in the world.  They have also changed their marketing strategies to put more of the online advertisements because they reach people fast and within a large geographical region. The marketing is done by a team of professional internet users who explain the specifications of their devices and the importance of trusting Huawei as the number one ICT solutions provider (Micheli & Carillo, 2016). The marketing strategies are convincing and persuading, thus making them attract a wide audience.

Furthermore, to keep with the changing economies, Huawei constantly releases technology updates to their customers who in return, give feedback on how they can improve the product. The company quickly analyzes and gives customized response and solutions depending on the concern raised by the customers (Micheli & Carillo, 2016). Huawei has modified its ICT products in terms of appearance, user specifications and experiences, and functions. Therefore, customers are always happy and would like to continue using Huawei products. With the proactive and active approaches to the local and international markets in changing their contexts, Huawei has remained fresh and relevant to the market.

Besides, as economies are growing and multinational companies are expanding re-creation of products as a change has to be adapted. However, this may be recognized too late because sometimes, resources are scarce and limited. Therefore, the resulting change is irreversible and desperate. A company should be ready to create its own products amidst a crisis or when their supplier fails to deliver (Khanna, Palepu, & Sinha, 2005). At no moment should the product run out of the market because the client will be forced to seek alternatives and may end up trusting the competitor’s goods. Huawei is a company that is never afraid of breaking the frame and re-creating their products. For example, when Huawei first deployed their third-generation network in the Middle East, it was requested to supply mobile phones for its customers. However, all mobile providers refused to sell phones to Huawei. The company quickly responded to the challenge by making a decision to develop its mobile phones. Today Huawei mobile devices have dominated the market, taking over companies like LG and Samsung (Micheli & Carillo, 2016).  Tencent Holdings has found itself in a situation like that of Huawei. China’s regulator had stopped approving new games for about nine months. The company has been forced to look for other products to offer in the market, such as media advertising to keep itself relevant to the market. They have opened online social media chat platforms that compete with the existing programs from their competitors (Qingqing, 2017).

Multinational Corporation should Stay Away from Developing Countries

Companies are going borderless and gaining access to international markets. However, some economies are challenging to venture into especially markets in developing countries. To be a successful multinational company, sometimes it is advisable to stay away and avoid entering struggling economies (Khanna, Palepu, & Sinha, 2005). For example, when a big firm enters a weak economy, it would be forced to modify its selling strategies to fit that of the nation. It has to offer goods to customers at low prices but maintain the great and quality of the products. The setback means that the company will have to incur expenses in production and to avail the product to the client who in return, gives low prices for the commodity. The firm may end up making loses. Again, the company may struggle to remain in the market, offering the products at a loss (Khanna, Palepu, & Sinha, 2005). Sometimes, it is advisable to keep off markets that are not favorable to allow the business to make profits.

Huawei Corporation has benefited from sating away from developing countries and where possible they produce goods and services that sell within the market demands. They can re-orient goods to achieve a change that matches with the external forces. Their ICT devices are sold across the world with prices that are discriminated depending on the economy they are operating in. As the market continues to change and technology is being embraced in all parts of the world, the company continues to structure itself to provide goods and services that match the receiving country (Micheli & Carillo, 2016). They are not ready to make loses to remain relevant in the market, but they sue the strategy of providing transforming and restructuring products in accordance to the country’s economy and level of income. Tencent Holdings is slowly expanding its services from China to reach other countries. However, their move is calculated, and they have maintained a strategy to stay away from developing countries and struggling economies who may not be able to afford their services (Qingqing, 2017). Instead of operating under a loss, it is advisable to only expand the business to a market where the demand is high and equals the money paid for the service. Tencent may encroach other countries due to its rapid growth in popularity and expansion of its services.

Conclusion

Multinational corporations are business that have successfully managed to keep operational in more than two countries. They have managed to employ their strategies to keep up with international markets and the demands of people with different cultures and values. The economies are changing across the world and so should the multinationals respond to the transformation by modifying their business models to match which those of countries they intend to operate. Again, they should change their contexts, that is the goods and services they are offering to match the market demand s and preferences of the people. Lastly, they should purpose to stay away from developing markets because they may not survive well with the competition. Huawei and Tencent companies are examples of multinational corporations that have managed to employ these strategies and have been able to maintain their global place in the market.