Issues faced by the multinational companies

Issues faced by the international companiestransnational caller-out (MNC) is actually a transnational corporation that functions with a military headquarters in the origin of that country, bit having other(a) facilities and assets that be based in location of other countries. transnational corporation that operates in different countries provides applied science, marketplace backsideing skill and finance capital for a to a greater extent profit adequate market in return. Many armament countries be in possession of impose regulation which gives them a portion of sh be in profit, market and to a fault jobs which is generated by multinational corporation in that particular country.Multinational company roll in the hay be categories into 3 elements which is horizontally integrated multinational corporations, vertically integrated multinational corporations and diversified multinational corporationsHorizontally integrated multinational corporationsCorporations that manage e nd productestablishments in different countries that readys similar products ( example, McDonalds)Vertically integrated multinational corporationsManage merchandise establishment in certain countries to produce products as input to its production establishment in other countries ( example, Adidas)Diversified multinational corporationsProduction presidency is neither horizontally or vertically integrated ( example Microsoft) ball-shapedisationGlobalisation can be seen in much different way, champion way of seeing it as attach in the sh ar of economic activity that is taking place across national boundaries. Globalisation that stools place has precondition a great tint on a number of interrelated developments such(prenominal)(prenominal)(prenominal) asGrowth in foreign bear investments and multinational corporation,Enhance the development of communication and transport technology,privatization of public empyreans serveInternationalization of financial markets.The elect ric shock of globalization can be two positive and negative, the positive side can be seen the latent of generating wealth and amend the living standards of a country. Countries that have the skill and resources argon able to take advantage of the opportunities provided by global market. However, it seems to be flaws for countries that do not fall into this category. Globalisation can be said to have outgrowth the gap between of poor and rich volume, this can be seen by means of policies that be drives globalization process in the event of argument and not for the people. Globalisation is not entirely positive or negative, below are the point of view of people regarding the debate of globalization.Positive view globalisation is about(predicate) worldwide economic activity about open markets, rival and the supernumerary flow of goods, service, capital and knowledge. Consumers are its principal beneficiary.Its hits in wrong of immediateer growth, quicker access to new technology, cheaper imports and greater competition are available for all. Globalization has made the world economy much senior high-octane and has created hundreds of millions of jobs, main(prenominal)ly, but not only, in developing countries. It generates an upward spiral of jobs and prosperity for countries that embrace the process, although the advantages volition not cook everybody at the kindred condemnation. ICC (International sleeping room of Commerce) brief on globalization, Nov 2000Negative viewWhat are doing, in the detect of globalisation, to the poor is brutaland unforgivable. This is specially evident in India as we witnessthe unfolding disasters of globalisation, especially in food and agriculture.Dr Vandana Shiva, purlieualistIntroduction Unilever as an MNCUnilever was form in division 1930 through with(predicate) merger by Lever Brother in British and Marganie Unie of the Dutch and now Unilever is based in London.Unilever is angiotensin converting e nzyme of the fast moving consumer goods (FMNG) in the world. They offer a wide range of products in food, beverages, personal caution products and umteen more. The victor story of Unilever can be seen in the annual turnover in the year 2009 which is 39.8 gazillion worldwide and employs 163,000 employees nigh the world.Unilever established as a MNC beca map they have a headquarter in London, united Kingdom while other moving ines operational in other countries. here we lead study how globalization and Unilever gives match to the society as a whole.Macro- milieu for Unilever in host country (PEST analysis) PoliticalUnilever being a MNC company in the world does not actualise any fluidal parties whose activities is to leaven the party interest, this is because they believe that the business they operate in must be behave with honesty , integrity and openness. However, the political trends still regards Unilever for example in UK where the headquarter is situated.In early February 2010, Unilever has been burden by the increase of tax r veritable(a)ue by the UK presidential term. Initially, the company is already facing economic instability because consumer is un allowingly to dangle more money. Paul Polman, the chief executive said that the daily mail,If on pull in of that we would get an special regulatory or tax environment that would make us non- emulous that would be unfortunate for the UK.Mr. Polman is worried with the increase of taxation Unilever has to pay even more into for expenditure make up for research laboratories, manufacturing facilities and more.The chart above shows us the expenditure cost of Unilever from year 2000 to 2009. From year 2000 until 2004, Unilever has been slight(prenominal) on expenditure such as manufacturing facilities, and research and development sector. As of year 2004 onwards the cost has been increasing yearly until 1,700 (million) and with the recent increase of taxation in UK, Unilever go out have to spend more on expenditure cost in the year to make sense.This would improve the competitiveness of Unilever with other competitors as the inviolable is facing massive problems to deal with higher taxation, which leave alone result in lower profit removeed. This would be a motivational factor for the firm to undertake the problem by setting effectual strategies to confine such taxation rate at the same time remain competitive from footing aspect. For eccentric, Unilever has utilize several technologies pallet weather storage system from Bitto Storage System Ltd to store frozen products. frugal environmentIn the economic environment, Unilever generates wealth by adding value to new(a) substantials, and manufacturing their product for the consumers. The parties that are involve in the economic environment is their employees, government, investors, and many more communities that benefits from the activities of the company.This graph shows the parties that benefit from th e activities that are ventured by Unilever in UK. disrespect the economic instability that happens in decades, Unilever is still able to generate an operating profit of 5,020 and gross sales of 39,823 million in 2009. This graph shows us that the employees gain the spectaculargest share of the company which is 5.2billion, whereas the least share is earn by the local anaesthetic communities which is 89million. The provider of capital obtains the 2nd highest share which is 2.5billion and the governments gain 959million from the company in the form of corporation tax that is issued by the government.Sociological Environment reservation a difference in society is one of Unilevers biggest aim because they deprivation to deliver the best and to give back to the society that has been supporting the success of Unilever. Unilever will be focusing on 4 elements which is big(p) more resource to consumers, focusing more on research and development on healthier products, to provide nutri tion information to the understanding of consumers and to a fault improving nutrition feeling of their products.In order to improve the nutritional quality of the product and reserveing the taste , It is estimated that reduction of salt intake by 1g can inhibit the chances of strokes by 5% and heart attack by 3 % lessen salt by as little 1 g. The diet Enhancement Programme has come up with a strategy cognize as salt reduction strategy , in this strategy it states that in 2009 we set product benchmarks to achieve a dietary intake of 6 g of salt per day by the end of 2010, with the ambition to invalidate upgrade to5 g per day by the end of 2015.This graph clear shows that Unilever has taken the responsibility in giving consumer to make healthier choices. Unilever has come up with healthier products and in addition providing the health information on the products so that consumer will understand the content of nutrient in the product. For example, Knorr is one of Unilevers storied food solution brands in UK, all crouton varieties are now containing less 70% less saturated fats and up to 40% less sodium.Unilever has likewise extended their impact by working together with population feed Programme (WFP) where they support developing countries and improving the health and nutrition of product. In order to reach out to the people , Unilever in UK has donated 500,00 through global partnership and with (WFP). They also further people to donate through website to the Haitis earthquake disaster relieve cost. Unilever also had donated soap and Puriet ( water purifier that does not deal pressured water and or electricity. applied science EnvironmentIn the technology sector, Unilever has been outlay in the area of e-business to improve brands communication and market through internet, and also making transaction simple along chain. Unilever Technology has work together with Unilever R D group in order to meet consumers needs. In the year 2003, Unilever i ntroduce the new pallet live storage system from Bitto Storage System Ltd. The purpose of this technology is to store frozen products.Plans are being made to improve IT groundwork in Unilever. For example, increment in the energy- efficiency of data centers and applying power management strategies. Tele heraldic bearing video conferencing is also utilize in order to reduce the impact of business travelling. Telepresence has been generated in 13 countries and plan to add another 39 countries in 2010. This technology have helped us to reduce our emission by 4,230 tonnes and observe up to 12 million in travel cost for the year 2010.PEST of Unilever in different countriesPoliticalUnilever in Nigeria are now facing with laborious time this is because of the governments policy such as indigenization, nationalization and also to mourn state cornerstone The effect of this has made given Unilever with no choice but to consider pulling out of Nigeria and relocate themselves to Ghana. U nilever chose to leave is because on that point is no commitment made to the deplorable state of basic infra coordinate in the country that causes a big loss to the business. Moving on, Unilever is also losing business because the inadequate power supply which has cost billion of naira and fivefold taxation from regime in Nigeria has reduce the profit made drastically. The government of Nigeria should intervene this issue of basic infrastructure and develop the necessity involve before Unilever pulls out and cause bigger lose to the country such as increase in the rate of unemployment and living standard of the people can be advance.EconomicThe market environment is highly competitive in the Western atomic number 63 and this has disrupted the market of Unilever, one of Unilevers main competitors in the Western Europe would be Procter Gamble (PG). EU free business policy has also minted the profit potential of Unilever. Products are also force to reduce in price by retailers, a nd collectable to current economic tide many consumer are unwilling to barter for expensive products.In developing countries (Asia and Africa), where political instability, Unilever has come up with strategies in order to maintain the momentum of profitability. Example, some products are in niggling packages for low income earner for affordability, and this has help to increase the profit and at the same time increase the hygienics level of the people.Due to inflation and version of currency Unilever in some country such as Nigeria to be precise has suffered a decrease in profit in 2005 compared to 2004. graphical record below will show the turnover of Unilever in Nigeria.This graph will show us the turnover in 2004 and 2005 is N3.34 billion (naira) and N2.56billion (naira) respectively. The profit subsequently tax is N2.17billion (naira) and N1.61billion (naira) respectively in the year 2004 and 2005. From here we can break up there is a decrease in profit in Unilever of Nige ria. scurvy per capital income of the people has also affected the market of Unilever because over 30% of African population lives on less than $1 per day.This would highly affect Unilevers competitiveness in the industry as it is important for an international firm to encounter every variance in business, either currency or increment in taxation. It shows that Unilever has implemented a brilliant strategy to encounter the price factor for products, which is changing the packaging to affordable price by reducing the size, consumers crave for Unilevers product can still be fulfilled. As shown above, turnover for Unilever has increased tremendously even after 2005 which show Unilever is equal and competitive to maintain its business level.Socio-culturalUnilever has done their part to maintain the socio-cultural environment with its sustainability development. The company has been working very hard to bring improvement hygienics and better nutrition to the people in Asia, Africa and Latin America. Over 30% of Africa population lives on less than $1 per day.The cognisance for people regarding hygienics and nutrition is very important and this has given the opportunity to strengthen their goodwill. However, marketing vehicles such as advertisement in print media has been overcome with challenges such as low workforce. Therefore, employment of more resources is very important for instance face-to-face communication to increase the awareness of the people. Unilever has also employed one C nationalities to ensure diversity between employees and consumers. The major strategy that is use by Unilever is a diversity toolkit which is use to manage and leverage diversity that increases high demand of their products in the developing and emerging market.Unilever has also extended their impact by working together with World Food Programme (WFP) where they support developing countries and improving the health and nutrition of product. In order to reach out to the people, Unilever in UK has donated 500, 00 through global partnership and with (WFP). They also encourage people to donate through website to the Haitis earthquake disaster relieve cost. Unilever also had donated soap and Puriet (water purifier that does not need pressured water and or electricity.This would align with sustainable environmental outcome that is increasingly important globally because the firm has implemented several remedies in enhancing its sustainable development from human rights, community services and environmental aspects, such as donations and activities to increase cleanliness awareness among the African nation.TechnologySince in 2000, Unilever has been expending on IT to enhance the development of its business, mainly giving priority to the e-business sector as to improve brands communication and market through the blooming of internet as making transaction simple along chain.Unilever Technology has work together with Unilever R D group in order to meet consumers needs. In the year 2003, Unilever introduce the new pallet live storage system from Bitto Storage System Ltd. The purpose of this technology is to store frozen products.Plans are being made to improve IT infrastructure in Unilever. For example, increment in the energy-efficiency of data centres and applying power management strategies. Tele presence video conferencing is also applied in order to reduce the impact of business travelling. Telepresence has been generated in 13 countries and plan to add another 39 countries in 2010. This technology has helped us to reduce our emission by 4,230 tonnes and save up to 12 million in travel cost for the year 2010.Sustainable development from environmental aspect can be seen as an important element for Unilever in improving its technology to reduce taint towards the environment. The technologies implemented are highly effective in reducing taint caused by the business and this is affected by the increment in awareness of environmental issue s globally in recent decades for positive environmental outcomes. match of globalizationThe people around the world have always given the opportunity to exchange goods, services, culture, and knowledge with each other. However, recent technology and reduce of barriers has increase the exchange rate in recent years. This has given markets challenges, big markets means earning more money and interrelated to greater wealth multiplication for investing in development and reducing poverty, whereas weak domestic policies and trade barriers has stop a country from being flexible and fail to take the opportunity to maximise the benefits and minimise economic downfall. Below is table that shows the impacts generated by the globalisation process.Positive impactEnhancing competitionin recent decade is always a factor for firms to set effective strategies to remain competitive and also gaining additional profit in the hereafter. Through competition, can help promote efficiency and productivit y for the business, with different challenges that an international firm has to encounter to maintain its business activities and profit because business strategy is life-and-death in order to go by as it would improve business systems and practices.Improved environmental awareness and office has contributed to positive environmental outcomesby encouraging the use of more efficient, less-polluting technologies and facilitating economiesimports of renewable substitutes for use in place of scarce domestic natural resources.Negative impactThe income earned by individuals will decrease due to the economy vacillation and also low profit for a firm. This could be seen during economy fluctuation where employees salary is cut and increment in unemployment. Therefore, the economy will not be improved.Sustainable developmentis increasingly important because it is not only about how well a business runs, instead, how well the people is being treated. adult male rights are also included in this section where fairness in treatment and other necessities of an employee or customer must be fulfilled. authorization impact of globalisationTechnologyUnilevers technology is very important to maintain the momentum to generate profit. New technology in the business which has branches globally will impact the productivity and encourage effectiveness as it will improve the living standard of the people. Existing technologies has consume large summate of energy and chemical in producing products and as a result produce large amount of wastage of water. Unilever has co-operated with Voltea Limited in order to save the utilisation of water. Volteas breakthrough Capacitive Deionzation (CapDI) is the first desalination system that is able to convalescence high water usage and also operates without producing any chemical that faculty pollute the water. In addition, this system has substantially reduced energy in production of products. The technology will soon be implemented by ot her businesses globally under the influence of Unilever, which was earlier to alter Unilevers host countries technology. CEO of Voltea Michiel Lensink has said, Working with industry leaders, our technology has proven itself to be a breakthrough in low-energy, low-cost water desalination. As we lodge our growth, we are keen to seek out industry leading partners who can further strengthen our position. Clean water is essential in sustaining agriculture such as tea production in Lipton tea on of Unilevers top leading beverage brand.Sustainable developmentUnilever has made approach in making tomorrow a better day. With their tag line creating a better future everyday shows that they have venture into enhancing the development of society. For the hygiene concern, Unilever are able to change the hygiene behaviour of 1 billion people in the future with emphasising on hygiene education programmes on developing countries such as Pakistan, African and also Sri Lanka. Reduction in the rate o f carbon dioxide, water usage, and chemical waste will continue in the manufacturing operation because up to 2009, Unilever has manage to save up to 15% of water usage and reduce 25% of carbon dioxide emission to the environment.This would efficaciously influence lifestyle of undeveloped countries and areas globally as these countries deserve to have better living standards under global effort by Multinational Corporation.Changes in LifestyleChange in lifestyle is a crucial factor in globalisation because the benefit that consumers extract from tea would affect the health of younger generation and intake pattern of tea. Health is more important as time goes, tea is better than coffee from benefit because study has shown that tea containing anti-oxidant that can reduce the rate of getting a heart attack and cancer. Lipton tea can also change the lifestyle of older adults enjoying the fact that a modest price for a form of tea and snack , they can meet up with friends and family m embers instead of waiver to a bar and paying for an alcoholic drink that does not even bring much health benefits compare to what tea has to offer. People in recent decade has identify the importance of healthy living which thereof act as an indirect force to encourage tea wasting disease worldwide, as compared to coffee that would carries negative impact on health.Tea consumptionhttp//www.fao.org/docrep/006/y4343e/y4343e05.htmTea exportshttp//www.fao.org/docrep/006/y4343e/y4343e05.htmGraphs above demonstrated the tea consumption that is increasing tremendously. World tea consumption and exports are both playing a relatively paid business.Strategy for globalisationUnilever has applied several remedies and improvement in business activity in order to sustain globalisation that will give enormous impact to its business. individualized care for future sales growth and profitabilityUnilever has identified the key to achieve sustainable profitable growth through its personal care bu siness fraction as it generate the fastest-growing business compared to other sector such as food and beverages. Personal care business refers to the products that are self managed, such as hair shampoo and skin care products. This is because the demand for these products in the market has been increasing, as well as the existing sales from this segment is satisfying. However, Unilevers sterling(prenominal) rival Procter Gamble (PG) for many years have been more in advance(p) and creative in introducing new products. In the previous year in the personal care sale increase only by 1.4% to 11.30billion while overall turnover rose by 1.4% to 40.2 billion. In order for creating future sales growth, Unilever will focus more personal care segment for future sale growth and sustaining profit from increasing raw(a) material cost. Graph below shows the revenue increment in Unilevers products line, including personal care segments.http//www.goldmood.com/cosmos/h/UL.htmlExternal Pressure and Organisational RestructuringHigh cost of raw material, adverse exchange rates and macroeconomic worries such as politic and regulation of countries might affect the performance of Unilever. In order to furbish up generation of profit and sustaining raw material cost Unilever has come up with few strategies. Unilever has to reduce 20,000 jobs across its production division and combine its Personal Care and food sector into one category to reduce cost that will be delivered to consumer. Unilever has come up with Path to Growth strategy that promises improvement in its performances. This strategy will help the organisation to reconstitute its two global divisions, Home Personal Care and Food into one division. This would effectively lower production costs that will be implied into price of the products and influence consumers consumption from price aspect. Price is a crucial matter to consumers due to economy fluctuation that will affect lower spending power.Restructuring Unileve rUnilevers CEO Patrick Cescau has announce that Unilever will be changing their management structure in order to focus on developing markets and promoting executives with experience in that environment. This is due to the reason of constant change in global business activity which makes Unilevers management structure less effective to cope with last mentioned business strategy. Centralising management has combined its central and Eastern Europe division will allow emerging economies to share similar consumer traits and potential for growth, as well as combining the cost that the firm has to sustain for distance management.Besides, combination of Home Personal Care and food sector is the companys effort to increase its profitability in profit by reducing production cost from workforce aspect. This is because the cost that will be delivered to consumer will be lower and make products affordable for consumers to purchase.glohttp//business-strategy-case.blogspot.com/2008/04/unilever-b usiness-strategy-2008.htmlhttp//www.unilever.com/sustainability/strategy/