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MNB3701 ASSIGNMENT 6
FINAL REPORT SEMESTER
1 2024 (183275) - DUE 13
MAY 2024
COMPLETE REPORT
[DATE]
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[Company address]
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MNB3701 Assignment 6 FINAL REPORT Semester 1
2024 (183275) - DUE 13 May 2024
Table of Contents: (p.s. Could not correct table of contents – open office)
1. Executive summary 5
2. Literature search 8
3. Background 11
4. Formal institutional frameworks 14
4.1. Overview 14
4.2. Evaluation of the determinants to the success or failure of an MNE in a formal
institution and key implications for management action of formal institutions 16
5. Informal institutional frameworks 22
5.1. Overview 22
5.2. Evaluation of the determinants to the success or failure of an
MNE in an informal institution and key implications for management action of
informal institutions 24
6. Resource appraisal 29
6.1. Overview 29
6.2. Evaluating the success or failure of an MNE in terms of the
resource-based view 30
7. Challenges trading internationally 38
7.1. Overview 38
7.2. Evaluating the MNE's comparative advantage in location and resource
endowments 38
8. Foreign Direct Investment 44
8.1. Overview 44
8.2. Implications for management action. 51
9. Exchange Rates 53
9.1. Overview & Determinants of Exchange Rates 53
9.2. Implications for managing currency 56
10. Global, regional, and Bilateral Integration 57
10.1. Global, regional and bilateral integration of the MNE 57
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11. Socially responsible business 61
11.1. Overview 61
11.2. Implications for management action 63
12. Recommendations66
13. Conclusion 67
14. Bibliography 71
15. Revisions 74
Executive Summary:
This report will focus on Multinational Enterprises (MNE's) as well as the formal and
informal institutions and the environments that they operate in. A multinational
business is an organization that makes foreign direct investments, owns, and
manages value-adding ventures in many nations (Peng & Meyer 2019). A MNE often
has numerous facilities across the world, generates a sizeable amount of revenues
from international activities, operates subsidiaries with a shared strategic vision and
resource pool, and frequently hires foreigners or expatriates for important
management positions. (Erwee 2017).
The purpose of this report is to evaluate the parts of how formal and informal
institutions function that are crucial to the success or failure of the MNE, as well as
determining and assessing the factors that affect whether an MNE operates
successfully or unsuccessfully in the African context. I have chosen Gazprom, the
Russian majority state-owned multinational energy corporation as my MNE. I have
done research regarding its expansion, business practices and evaluated them.
Regarding the formal institutional frameworks, I have discussed the political,
economic, and legal systems in the host country that would have affected the MNE
positively or negatively. The informal institutional framework included the differences
in the religion, culture, language, and ethics of the host country from the origin country
of the MNE. The African host country which will be discussed in this report is the North
African Country, Libya.
This report will focus on the Multinational Enterprise, Gazprom, as well as the
formal and informal institutions and the environments that the MNE operates in, the
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resources and capabilities which gives them a comparative advantage, the
challenges of trading internationally, foreign direct investment in the chosen host
country Libya, identifying the currency risk exposures that the MNE confronts while
operating in the host country, the affects that global and regional institutional
frameworks have on the MNE and determining determining whether or not the MNE
has a clear CSR strategy that balances economic and social interests.
5
Gazprom, a Russian oil giant, has been exploring the possibility of internationalizing
into Libya due to its rich natural resources and diverse cultural landscape. Despite
the challenges that companies face when operating in foreign countries, MNEs can
leverage resources and capabilities across borders, allowing them to acquire a
competitive advantage in the global economy. Libya has a complex regulatory
environment, political instability, and a diverse cultural landscape. This report
examines Gazprom's entry into Libya, challenges it faced, and market performance,
highlighting the incorporation of the MNE's country's religions, culture, language,
and ethical traditions into its informal institutional structure.
This report exemplifies the resource-based view methodology, which emphasizes
the importance of resources and capabilities to an organization's success. The
capabilities and resources of Gazprom can aid them in gaining and preserving a
competitive advantage. The resource appraisal's strategic ramifications for the
MNE, however, may be important. MNEs have several difficulties in international
trade, and these difficulties have an impact on their success or failure, particularly
where they operate.
Although the managers face a variety of issues, their main responsibility is to
identify the MNE's comparative advantage, nurture it, use it to its benefit, and find
new locations to exploit the comparative advantage. MNEs are successful in
attracting foreign direct investment because they take use of advantages in
ownership, location, and internalization. Institutions (which set the rules of the
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exam help:
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