Prominent Roles of Multinational National Enterprises (mne)

Introduction

It is a fact that a significant number of MNEs (Multinational National Enterprises) are working in United States and Saudi Arabia. In addition, most of these corporations or firms are increasingly seen as powerful and excessively big, and are expanding considerably in power and size. The United States has enjoyed jointly advantageous commercial associations with Saudi Arabia for the last several years. This insight points to the thought that large businesses are intimidating independent corporations of the host-nation-states and distorting their social and cultural fabric 1. But the American share of the Saudi industry has been shrinking in recent years. A senior commercial officer Amer Kayani, in America and Foreign Commercial Service, discuss few of the strategies that American companies can employ to do well in this Saudi market 2.

Discussion

The most prominent roles of MNEs in the Saudi-foreign business enterprise are apparent in the foreign company's value-adding functions of marketing, manufacturing, trading, consulting, project management, contracting, hotel operation, insurance and banking. Joint ventures are the leading form of MNEs in Saudi Arabia, both in the service and manufacturing fields. Similarly, MNEs offer licensing, financing services, franchising, and diverse supplementary functions in the Kingdom.

1 RICK MOLZ, CATALIN RATIU & ALI TALEB, CATALIN THE MULTINATIONAL ENTERPRISE IN DEVELOPING COUNTRIES 166- 168, (LOCAL VERSUS GLOBAL LOGIC 2010).

2 ANTHONY SHOULT, DOING BUSINESS WITH SAUDI ARABIA 288-292 (GMB PUBLISHING LTD 2006).

The multinationality of a group or a firm which are functioning outside national boundaries is not essentially identical with global production which is the major focus of modern multinational theories normally. Business experts usually suppose the rivalry of MNEs operating in Saudi Arabia as a function of management, economic, technological, marketing and other variables. They also suppose the impact of MNEs to Saudi Arabia's socio-economic growth as important and positive. Experts analyzed some objective signs of business achievement and their relation to chosen measures of multinational responsiveness and awareness to local culture. The results show that the business achievement of MNEs operating in Saudi Arabia is linked to their local cultural understanding and receptiveness.

1. A corporation setting up a business abroad requires an understanding of the host state's culture to decide the possibility of promoting its product or service in those surroundings. Market circumstances should be reviewed to make sure that a new corporation can secure a share of the overseas market. Tariffs, compliance and duties with the host region's import, environmental and health regulations are other significant subjects to analyze as well. As corporations do foreign investments, mainly in research and development, numerous aspects control their location decisions comprising higher quality labor, lower costs and the defense of rational property rights, sophisticated IT infrastructures and consistent educational classification 3.

3 WILLIAM M. PRIDE, ROBERT J. HUGHES & JACK R. KAPOOR BUSINESS 385-386 (Cengage Learning 2009).

Globalization is the age of minimum trade hurdles and global rivalry. Corporations can no longer completely rely upon their local markets. Furthermore, several developing states have been preparing their economies for faster growth and are determined to finance rising industries and infrastructure through Foreign Direct Investment (FDI). A great number of MNEs and investment entities look for entry to grab the enormous opportunities and prospects presented by rising economies in the field of telecommunications, transport, power, roads, manufacturing, real estate, insurance and banking etc.

Globalization is the latest trend of present time with many regions start transform to relax their economies and incorporate with international economies to attain fast economic growth. A major number of nations have connected with World Trade Organization (WTO) during the previous 5 years which has more speed up the development of globalization. Moreover, with several states because of joining WTO during the subsequent 3 to 4 years, the world is succeeding towards develop into a global village. Foreign direct investment (FDI) is analyzed as a long-time foreign direct investors' investment in a venture which is occupant in an economy other than that in which the foreign direct investor is belong. The FDI association has a foreign partners and a parent enterprise which jointly construct a transnational corporation (TNC). Due to succeed as FDI over its foreign affiliate the investment should have enough rate of the parent enterprise power4.

Many contemporary theories and paradigms on multinational business operation have materialized in the last few decades or so, start mostly to clarify post-war United State. manufacturing and direct investment in west Europe rather than services such as banking.

4 ABBAS J. ALI, BUSINESS AND MANAGEMENT ENVIRONMENT IN SAUDI ARABIA: CHALLENGES AND OPPORTUNITIES FOR MULTINATIONAL CORPORATIONS 177-181 (NEW YORK: ROUTLEDGE 2008).

In recent until today, various multinational businesses theories and paradigm (based on economics and management perspective) have sustained to materialize with focused on the growth and existence of global production. Approaches to other international businesses modalities are taken for granted as substitute to multinational enterprise (or more particularly global production). Consequently companies decide to follow direct overseas investment (or completely possess business subsidiary across national borders) in the references of their possession precise benefits, location related benefits, also global incentives. Thus, multinational enterprise can materialize by asset of these benefits and in answer to externalities or imperfection in the factor or goods markets. There are general thoughts between global business scholars the market flaws (such as tariff and other significant hurdles) avoid the competent operation of worldwide trade, hence the materialization of multinational firms.

In attempting to explain the existence and growth of multinational companies (MNEs) in United States and Saudi Arabia as a response to market imperfections, some scholars emphasis on a structural market imperfection just like monopolistic and collusion tendencies and others emphasis on endemic or transactional imperfections. For instance the internalization theory supposes that higher transactional cost prompt firms to internalize markets across national boundaries. Internalizing