Geographical Scope Options of Multinational Enterprises

Topic: International Trade
Words: 298 Pages: 1

A multinational enterprise (MNE) is an organizational unit that produces goods and delivers services in more than one country. MNE considers distinct geographical scope options with the purpose of achieving the most effective operational process. It is necessary to distinguish local, regional and global ones to create a comprehensive insight, summarizing the dimensions MNE work within. It is possible to outline the classification of firms as host or home region oriented, which indicates the direction, enterprises tend to move to and explain their representation as mostly belonging to one or another of the mentioned levels.

One of the MNE’s geographical scope options is the subsidiary level, which complements the global one and forms an additional layer of complexity filled with the regional approach. This option is an essential method of spatial coordination, which also links the local to the global. The regional level is considered the most valuable and comprehensive due to its significance in connecting subsidiaries to headquarters and the general impact of the provided within this dimension services and goods.

Firms usually tend to achieve the global company status, which is possible only in the event of balanced orientations, which are directed either to home or to host regions. It is not possible to outline which of the mentioned directions is more important for the international status obtaining, as appropriate methods of measurement are absent. Therefore, it is not possible to outline the effects of home and host country orientations and the efficiency of the local level in comparison to the region one. To conclude, the internationalization paths and profiles to outline the geographical scope are home and host region orientations, which are complemented with either local, regional or global companies directions, with the average that leads to the obtaining the status of the international firm.

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