Developing A Business Strategy

Coursework Student’s Name Institutional Affiliation Coursework 1 Some MNCs operate a single business. However, many MNCs have more than one type of business strategy. What are the basics of multinational diversification? How do they choose their mix of different businesses? Explain both related and unrelated diversification. The aim of developing a business strategy is to enable the organization realize its overall objectives and get some profit. However, after a business realizes its objectives or the strategy proves to be effective, the organization may consider diversifying their portfolio as an attempt of managing risks by minimizing any potential harm during harsh economic conditions. Therefore, the primary basic for diversification is to diversify into business activities that cannot have negative impacts to the organization during unfavourable economic conditions as its current business activity. The basic idea is that if one business activity is not performing well, the other business activity will help in offsetting the harm and keep it viable. MNCs choose their mix by either adopting a business activity that is in line with its current strategy or follow a different product or service line. Therefore, they may consider acquiring, merging, or getting into joint ventures with other businesses. Therefore, it is not difficult for MNCs to find their mix in different businesses. When a company adds a product which is similar to their current product line is referred to as related diversification. For example, Nike venturing into the clothing industry. On the other hand, when a company adds a new product or service which is different from its current strategy. 2 As a major form of political risks, the world has witnessed the impact of terrorism on the operations of multinationals, especially within the past decade. Explain the different kinds of political risks and tools multinationals use in fighting them. International business is risky even in developed countries and Multinational Corporations venturing into foreign markets need to be careful especially where political risks may prove to be hard to discern and address. For the past two and half decades, the risks have increased due to globalization. Globalization has brought a lot of benefits to the economy but it has also exposed businesses to more risks than the ones in domestic markets. However, although political risks are unavoidable in foreign markets, they also have their reward. The various kinds of political risks that MNCs are subjected to include: * Political instability (terrorism, violence and conflicts): Violence may arise in foreign markets which may lead to destruction of properties or worsen the market conditions. On the other hand, foreigners have become the primary target for terrorists where they kidnap them and use them as leverage to demand either for ransom or other conditions (Brink, 2017). * Policy changes: from time to time, governments may change trade policies especially taxes and tariffs and even conversion regulations where they demand that local currency not to be converted into the foreign currency. * Administration risks: political mayhem may cause administrative delays where governments may delay in approving critical businesses a...