External Factors and Analysis Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Case Analysis

The global economy in the coming 15 years heavily depends upon the actions of multi-companies and what areas they focus upon.

Possibly the world can continue to see deflation as a threat.The income gap between the rich and poor keeps broadening.Moreover, the governments in under developed and poor economies can start crumpling which would result in civil wars.The threat from terrorism has been increasing radically and forcing the public and private sectors to hold back their resources due to security concerns. The multinational companies are bringing all these factors into account and facing complexities in expanding their operations. The risk element is imposing exceptional limitations to their investments. The MNCs have slowed down the flow of investments into emerging markets and lugging back their investments.

On a brighter side, the world can see the private sector investing large amounts to entrepreneurial activities resulting in job creation and entrance of millions of new buyers and consumers into the global marketplace with every passing year. These activities have vigorously boosted the economies of the developing countries. The high reduction rate of poverty is benefiting the people resulting in social benefits and stabilizing the developing economies. The civil and cross-border conflicts have been reduced. The MNCs are focusing on expanding their operations in several geographical locations in this competitive environment, supporting their activities with innovation and constant issue solving techniques in order to compete with others efficiently.

Recommendation

The possibility of both the scenarios is equally possible. The occurrence of both scenarios heavily depends upon the decisions taken by MNCs in times to come. How they perceive things and how they can benefit from the happening around the world, the actions taken by MNCs will heavily affect the future of the global economy. The type of such situations depends upon the willingness of the multi-nationals to divert their flow of investments towards poor markets around the globe.

The MNCs should preferably start to invest in the developing economies. Their investments would heavily affect the lives of billions of people, allowing them to live a life with better living standards. Implementing these actions does not require MNCs to operate as a non-profit organization in poor economies or enter poor countries with charitable purposes. They should enter these markets with business intentions as these markets have huge potentials and enormous benefits can be extracted by entering these markets. MNCs would not be responsible for the political or the economic slowdowns occurring in poor countries. Entrance of multi-nationals in developing would indirectly prosper the poor nations by their direct and sustained involvement in these un-tapped markets.

These markets have huge potentials to capitalize upon and they provide MNCs with huge opportunities. MNCs would not only be generating revenues, but they would also be playing a part in making the world a better place, not only for the ones with prestige but also for those who have strived enough in their lives to get the basic needs for their families and communities.

External Factor Analysis Summary (EFAS)

Opportunities:

Developing countries are an untapped market, which has huge growth potentials. It is known to everyone that the world’s poor are disturbingly in abundance. 4 billion of the world’s total populations earn less than $2000 each per year. This huge market is left untapped due to the factor that causes reluctance to invest in these markets.External Factors and Analysis Case Solution

Companies assume that these people with low incomes would not opt for buying things which are not their needs. Other various political and environmental are perceived as barriers by these MNCs. This view is majorly outdated as many of the MNCs have already started working in these developing areas of the globe and are successfully operating and generating revenues focusing on the upper-middle class segment of these markets, which indicate that the perceived barriers are of less complexity than assumed to be.

The poor are also interested in buying not just basic need items, but luxury items as well. They have adapted to a trend of buying what one can purchase to increase living standards instead of saving for the times to come. The people in developing countries are also willing to pay higher prices for the quality products. The cost of manufacturing and marketing would also be very cheap comparatively due to the economic and political situation of the company, allowing the company to cut down the costs.............................

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