Portfolio Project Part 3

Running Head: MULTINATIONAL 0

Antonio D. McMillian

American Military University

BUSN601B005

April 16, 2017

1. The company of choice is the multinational corporation (MNC) Coca-Cola. The three countries of evaluation are United States, South Africa and China.

2. The three nations are members of the international monetary fund, the World Bank and the World Trade Organization.

3. USA follows the rules as prescribed in the three major corporations. This is because the nation was one of the founders of these organizations in their inception in 1945, hence the nation is aligned with most of the principles in the said organizations.

South Africa on the other hand, has been following suit as a developing nation relies on the policies of such organizations to make it in economic development. China on the other hand may not have expressly followed these policies to the later. A testament to this fact was the manner in which the nation managed to survive through the 2008 Global Economic Crunch. (Adhikari, 2002)

1. South Africa and USA are largely capitalistic in nature. They allow for investment to take place from MNCs from other nations. The reason why USA may not be entirely lucrative in terms of investment is due to the fact that the cost of production or manufacturing may be substantially high.

On the other hand, China for the longest time has been largely communistic. As a result there are fundamental barriers of entry both instigated by the governmental or even by the status of the economy. Some of the barriers of entry include tax legislations or even difficult licensing from the government on the prospective operating MNCs.

With regards to the judiciary systems, it is evident that the three nations have substantially strong judicial systems. But the influence of the executive on the Chinese judicial system may be significantly affected. (Bello, 2006)

1. With regards to the practices of the nations in allowing for globalization, owing to the capitalism in the South African government and US nation, the practices herein are largely effective in allowing for the development of globalization efforts of the MNCs.

The policies towards governance is that of transparency and checks and balances from other arms of government such as the judiciary and legislature. With regards to the competitive markets, capitalism allows for free market, operations. This might not entirely be the case in the Chinese leadership, which may intervene on the market and set the prices or supply of commodities.

With regards to property rights, a lot of Chinese property is owned by the government. On the other hand, private ownership is more prevalent in the American and South African economies. Corruption is a major issue in the three nations, with the Chinese having most stringent punitive measures. (Ikenberry, 2008)

1. The company is primarily a producer of commodities. The major products that the company deals with are soft beverages namely, Coca-Cola, Fanta, Sprite, Novida, Minute Maid and Stoney. Most of these commodities especially the first three are mainly produced locally and even exported to other nations. The global presence of the company is something to behold, as these brands are somewhat universal.
   

1. The company faces both types of barriers to entry in the prospective target markets. There are particular trade barriers that curtail the expansion of the company. Some of these are the tariffs and duties on the importation of particular concentrate from the mother country (USA), thus this is bound to drive the operation costs upwards. One of the social barriers to entry might be restriction of the drink in particular institutions such as some religious areas. Largely the company faces the duties and taxes barriers to entry.

1. One of the trading block is NAFTA (North American Free Trade Agreement). This is where US falls in and the company benefits from being in the world’s biggest block economically. In South Africa, the regional trade block is SADC (Southern African Development Community). This is not such a huge block but South Africa happens to be the biggest economy in the block. The other is ASEAN of which China is a member. It happens to be the third largest block in the world. China is the biggest of these nations. (Gereffi, 2010)

1. The corporate would be better off in multilateral liberalization setup. This is because, the company has already taken an international approach in terms of the appeal of the commodities and the identity of the brand. The only benefit from regional blocks would be as a result of product and price discrimination strategies. (Narlikar, 2010)

1. The cultural knowledge in this case would be the manner in which the beverage is considered by the said regions (Foster, 2012). This is meant to consider if there are any social barriers to entry and hence try to circumvent them. The information can be obtained from reconnaissance activities which involves analysis of the performance of other preceding corporates in the region so as to learn from them.

Adhikari, R. &. (2002). What will WTO membership mean for China and its trading partners?. Finance and Development, 39(3),, 22-25.

Bello, W. (2006). The capitalist conjuncture: over-accumulation, financial crises, and the retreat from globalisation. Third World Quarterly,, 1345-1367.

Foster, R. J. (2012). . Coca‐Globalization. . John Wiley & Sons, Ltd.

Gereffi, G. &. (2010). The global apparel value chain, trade and the crisis: challenges and opportunities for developing countries. Global value chains in a postcrisis world: . A development perspective, , 157-208.

Ikenberry, G. J. (2008). The rise of China and the future of the West: Can the liberal system survive? Foreign affairs, , 23-37.

Narlikar, A. (2010). New powers in the club: the challenges of global trade governance. International Affairs, , , 717-728.