GLOBAL BUSINESS AND THE MULTINATIONAL FIRM

Global Business and the multinational firm

Global Business and the multinational firm

Introduction

In recent years, many nations have liberalized their trade policies by removing trade barriers, providing incentives, etc. which, in turn, have stimulated the process of globalization. In addition to the increased trade volume, the growing foreign direct investment (FDI) and the advancing information technology, communications and transportations are further facilitating globalization. The continuing progression from a world of distinct national markets to one of linked global markets is being fueled by the persistent forces of the homogenization of customer needs, gradual liberalization of trade, and the recognition of the competitive advantages of a global presence.

Global Business and the multinational firm

The presence of the newly emerging markets, such as those in developing countries and those under transition economies, should be recognized as new opportunities for the further expansion of international business activities. Their large populations offer potential consumer demand and production supply unmatched by any other regions in the world. Furthermore, the knowledge of the international marketers about these transition economies may be particularly useful for them to penetrate additional foreign markets. “Transition” denotes a political theory that advocates the use of democratic means to achieve a gradual transition from one political system to another, for example, from socialism to capitalism. “Transition economies” therefore, may be defined as the change from one economic system to another, for example, from planned economies (e.g. anarchism, communism or socialism) to market economies (e.g. capitalism).

The populations and gross domestic product (GDP) of these countries as a whole are substantial and are likely to exert major influence on, and offer significant business opportunities to the international business firms. It is often suggested that business ties between the western world and these nations should continue and grow without limits. Decision makers in these former centrally planned economies recognized the need to purchase products and technologies that were unavailable domestically in order to achieve economic growth, and to improve the very much-neglected standard of living in their societies. As a result, government planners of former socialist planned economies began to include much more market considerations in their decision-makings and opened up their economies to western businesses. Their drives towards the modernization of production and growing consumer demands have greatly raised the attractiveness of doing business with these transition economies.

Among the CIS countries, the Republic of Kazakhstan, which is located in the region of Central Asia, has continued its sustainable economic development as well as its efforts to improve the quality of life in the Kazakh society. It has a sizable population of over 15.5 millions, offers potential consumer demand and production supply unmatched by any other countries in the CIS region. In addition to the demand and supply, Kazakh consumers' purchasing power has greatly increased as a result of rapid economic growth in recent years (Table I).

When a change occurs in a culture as a result of contacting with another culture, acculturation often occurs. Acculturation is the process by which people in ...