MALAYSIAN MNCs ISSUES AND CHALLENGES

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

3 state of mind Three types of headquarters attitude/orientation towards subsidiaries in an MNC: Ethnocentric Polycentric Geocentric

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

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

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 firm’s policy Linguistic problems and different cultural background

CURRENT ISSUES AND CHALLENGES OF MALAYSIAN MNCS Dwindling global supply of resources Rising inflation Stag-deflation (combination of stagnation/recession/depression) Great depression? Rising unemployment rate People-government expectations Political tension

End. Discussion Thank you.