Economic globalization has a significant impact on the development of multinational corporations. The communication of technology, information and internet, and the convenience of traffic lead to the integration and standardization of the whole world. Customers all over the world can buyproducts they need from the internet, and have those products delivered in just a few days or weeks. Companies are eager to take full advantage of this tendency to increase their potential customers by millions by attracting foreign buyers. However, multinational operation is definitely not without any risks. The cultural differences and economic links between countries become more and more complicated. Since that, the transnational firms must not ignore various risk factors when going international. How to manage these risks and transfer them to profit chances is a critical issue for transnational enterprises. This essay will firstly discuss several risk factors which have to be recognized and handled. Following this, it will explain the profit opportunities coming with the risks. Finally, taking foreign companies in china for example, it will analyze the inherent risks or common mistakes facing them.
International risks of multinational corporation management跨国公司管理的国际风险
Profit opportunities arising out of the risks风险带来的利润机会
Risks or common mistakes of conducting business in china在中国开展业务的风险或常见错误
Conclusion总结
Generally speaking, multinational corporations are faced with more challenges than those conducting businesses just in one country. The risks mainly consist of cross-culture conflicts, HR crisis, exchange rate fluctuation, government regulations and so on. Among them, the exchange rate risk is considered a crucial part in multinational corporations’ management. Because the cash flows within multinationals in the way of various currencies, all financial analysis requires to measuring the consequences of the exchange rate fluctuation and currency value changes. A distinguishing feature of a nation is that it has the sovereignty over its citizens and property so it is its right to restrict the multinationals from transferring its resources and even confiscate their property without any compensation. These political risks vary from country to country, which also needs emphasis of multinationals. Many risks cause losses to multinationals while they can be diverted into profit opportunities. Therefore how to avoid risks and how to get the most out of them are two important subjects in multinational financial management. As the rapid development of China’s economy and the continuously improvement of politics, Chinese market is becoming more and more popular and welcomed by multinational corporations. On the other side, more diverse culture and complicated environment give rise to more risks and challenges. In a word, it is never an easy task for multinationals to survive the fierce competition from all over the world.
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