Multinational Companies in Malaysia
One of the primary reasons MNCs are eager to set up a business base in Malaysia is due to the lower operational costs involved. Malaysia is the third largest economy in South East Asia and has now become an upper middle income and export-oriented economy.
Being a multi-ethnic, multilingual and multicultural society certainly has opened a lot of doors for Malaysia, and the fact that Malaysia has received a high ranking for the ease of doing business by the World Bank has certainly helped.
Malaysia is one of the top locations in the world, especially for offshore manufacturing and service-based operations. It comes as no surprise than that multinational corporations from more than 40 countries all across the globe are currently invested in over 5,000 companies in Malaysia.
Even more reason why Malaysia is a highly sought-after country for MNC companies include the fact that regulations on the participation of foreigners in business is very easy compared to a lot of other countries in the Asian region. This means that foreign companies have a much easier time here if they want to establish a business base because there is less red tape to go through.
(a) Malaysia is one of the top locations in the world for FDI by MNC’s. Examine the ‘Determinants of Culture’ which affect MNC’s in their choice. (30 marks)
(b) Analyse the factors which have contributed to MNC’s investing their businesses in Malaysia
(Click in the case study link, and pls read the article inside the link) (30 marks)
Explain 4 forms of business imperfect competition and quote business example for each form.
https://www.investopedia.com/ask/answers/032515/what-difference-between- perfect-and-imperfect-competition.asp (40 marks)
Answers to Above Questions on International Business
Answer 1: Attracting foreign direct investment in a country requires significant efforts from the government to provide a suitable environment to MNCs. Malaysia is one of the top locations in the world for FDI by MNCs. The selection of Malaysia as an economy for FDI by MNC is affected by a large number of determinants of culture such as the values and beliefs prevalent in Malaysian society, language, social norms and customs, and legal and regulatory environment to which MNCs are exposed. The lower operational cost is also an important determinant of Malaysian culture that encourages MNCs in selecting Malaysia for their FDI decisions.
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