Companies would benefit from using a multidomesric [polycentric] Essay

Companies would benefit from using a multidomesric [polycentric] strategy in prefernce to a global marketing strategy [Anon] Discuss - Essay Example eriod of time since Dunning (1977) has driven home the point of why and how does a Multinational Enterprises (MNE) obtain this advantage away from their home bases. He developed the eclectic paradigm that explains the various factors that influence the MNE’s to decide on Internationalization through Foreign Direct Investment (FDI). Globalisation has become a necessity for companies in search of competitive advantage (Porter 1980). This has meant shifting of operations, especially production to other countries in preference over home countries. There is a twin objective for companies to go global; the first is to find new and cost effective production centres and the second is to find new markets. Motives for locating Production away from home countries may be summarised in a categorization formulated by Behrman (1972). The classification identifies four types of multinational activity; the resource seekers, the market seekers, efficiency seekers and strategic asset or capability seekers. The market versus hierarchy organisation of production (internalisation) was modified by the eclectic paradigm of Dunning (1980; 1988a; 1988b) who has evaluated Foreign Direct Investments (FDI) in terms of ownership, location and internalisation (OLI). Market and Resource seeking motives have been the two most recognised categories of motives (Dunning 2000). These two are the main reasons for most first time internationalisation attempts by firms. It often happens that resources fall short in the home country which limit growth of firms and in turn maces them inefficient, whereas the required resources may be readily available abroad. This would tempt the firm to go international for just the reason of acquiring resources to become competitive in the home market. Many an MNE have exploited cheaper labour and raw material abroad for reducing costs of their products for sale in the home countries. This has direct bearing on the profits of the company. Most Western companies