Why Do Firms Become Multinational Enterprises Essay

Why Do Firms Become Multinational Enterprises - Essay Example According to the research findings, it can, therefore, be said that the characteristic of MNE is that the company links together its affiliates with a common strategic vision and draws on a common pool of assets, information, human resources, trademarks, and patents. Before making a decision to establish a subsidiary abroad the firm should have the proper reasoning for this strategic decision. There are many different motivating factors or reasons for why firms become multinational enterprises. While some firms might pursue only one reason as priority based on its strategic direction, other firms might be influenced by a multitude of reasons. These reasons are classified into four broad categories. Each of these categories has a subset of reasons and factors, which also should be discussed in greater detail. Below is provided a more detailed overview of these groupings. Very often firms need resources, which are not available or accessible in their home countries. In order to solve t his problem, MNEs are often pursuing a strategy of investing abroad and thus to acquire or gain access to the resources that are either more costly in the home country than in foreign country or are not accessible/available at home country. In order to solve this problem, MNEs are often pursuing a strategy of investing abroad and thus to acquire or gain access to the resources that are either more costly in the home country than in foreign country or are not accessible/available at home country.