TYPES OF ENTERPRISES
Types of Enterprises
There are many types of business enterprises these include international, global, multinational, and transnational firms.
An international enterprise is an organisation which conducts business operations in cross national borders. Herein, the term parent company is used which refers to the firm investing or conducting business in international operations, while the host country is the country where such enterprise is conducted (, 2002). International business generally is business operations of any sort by one firm which take place within or between two or more independent countries. This general study can be subdivided into various branches of study as follows; the operation of a domestic firm in overseas branches, wherein such branches may be involved in marketing, manufacturing, or the sale of services (as with an accounting firm). This type of international business involves a management dimension in a foreign environment, and as such is one of the most complex and interesting types of international business studies. Firms cannot assume in this case that management problems will be identical to those faced at home and export and import trade. Some examples of these firms are Exxon, Colgate-Palmolive, Dow Chemical, and Texaco.
On the other hand, global organisations are known as national firms having international operations. This means that an establish company in one country buy have an international business operations to other countries. Global companies view the world as a single unit, and global corporation’s subsidiaries are guided by a global pervasive approaches and strategy. Global industries tend to provide fairly standardized and high quality products all over the world which enables the companies to exploit their savings derived from economies of scale. Global firms include IBM, General Motors, Hyundai, and others.
Multinational enterprises are companies that undertake production, research and development, finance and marketing on an international basis in more than one country. In order for an enterprise to be multinational, its activities must have a certain impact upon the economy … The management must have a global perspective and a strategy that surpasses nationalities and boundaries. It must work to advance the enterprise by utilizing the differences among various managerial resources and by setting regulations that limit corporate activities. The multinational enterprise must be supported by the overall system of control and organization in order to act as an entity. It must have enough flexibility to adapt to the demands for localization and customs of the society and government of the host country (, 2001). Only when these five conditions are fulfilled can an enterprise be called multinational. Examples of these multinational companies are McDonald’s, Siemens, Mitsubishi, and Ford. The United Nations Divisions on Transnational corporation and investment estimates that there are currently 38,000 multinationals, collectively controlling a total of 250, 000 foreign affiliates. First established in the seventeen hundreds, multinational companies were created as a means of trade with, and obtaining raw materials from less developed countries. Aside from generating profit, multinational corporations are also beneficial in its generation of vast employment.
The United nations have used a new term changing multinational or international firms, this term is transnational corporation which is designed to cover all business organisations that operate across national boundaries and in any field of activity, through entities or affiliates in two or more countries. It is noted that that it does not matter whether the enterprise is privately-owned, state-owned or of mixed undertaking. Some examples of transnational organisations are Citicorp, Nigeria Plc. Unilever Corporation has evolved into one of the foremost transnational companies and began to penetrate the home and personal market ( and , 1996; , 1992).
The business environment had indeed gone through several changes. Over time, the rise of various opportunities and innovations enabled several companies to extend their operations internationally. The changes in the external environment of local companies also led to changes in their business strategies and approaches. In order to adapt to the demands of global business operations, the management of participating organizations have been modified to international level. The globalization factor then allowed the business industry to restructure its primary goals. The introduction of various communication technologies further supported this business transition. While going global leads to promising outcomes, business operators knew that the risks are even higher. Moreover, several factors would have to be considered in order to penetrate international markets successfully.
For these types of businesses, strategic marketing and management is among the many important elements of global business. This generally enables business organizations to reach out to other consumers outside the national borders. However, with a different cultural background, preferences and interests of consumers, distributing products and services to a foreign land can be challenging. This implies that new business strategies would have to be developed and applied – one that will meet local interest. Expansion of the businesses’ key aspects such as technology, market, energy, brand, or talent is one of the common purposes of global business operations. Through international marketing, these goals become achievable. In turn, global business strategies result to a number of significant advantages. Increase in sales for instance, is one of the most important outcomes of global trade.