A multinational company maximises its competitive advantage by Essay - 1

A multinational company maximises its competitive advantage by controlling its own supply chain. Discuss - Essay Example Most numbers of the MNCs in the present business environment are likely to strengthen along with build wide network of their supply chain strategies in order to attain superior competitive position (Costinot, Vogel & Wang, 2011). With regard to the field of governance, the supply chain mechanisms that implement by the MNCs are often incorporated with complex systems due to the prevalence of different structure along with power proportion existing between the business partners. The organisations such as McDonald’s, Wal-Mart and Nestle S. A. among others are highly inclined with maintaining strong supply chain governance that enables them to proactively perform range of business operations across the global subsidiaries. In relation to increase the efficiency along with the business operations, organisations are significantly influenced by the aspect of Foreign Direct Investment (FDI). According to the present increasing growth of globalisation, FDI portfolios have major bearing upon the competitive position of the MNCs. FDI has long been identified as an essential aspect for the countries, facilitating them to stabilise their respective economic position. The development of FDI can only be made through the accession of MNCs into respective business markets. The integration of MNCs generally enables the countries to obtain substantial direct investment and also radically develop their commodity along with technical trade facilities (Qin, 2011). In this context, the theories associated with the efficiency of the firms have greater influence regarding the success of an organisation (Kusluvan, 1998).Based on the competitive scenario of the modern business environment, the primary objective of this essay is to demonstrate an in-depth understanding about the conventional theories associated with the major attributes that can be observed to remain in an unconventional SCM process. The essay therefore, tends to critically assess and justify the importance of an e ffective set of SCM process along with its key roles that further lead organisations to accomplish greater competitive advantage. 2. Discussion 2.1 Theories of the Firms With respect to the unconventional changes along with rapid development of SCM strategies made by the global organisations, it is widely accepted that strategies are generally developed in order to attain long-term sustainability in the competitive market. A few of the major theories associated with firms’ long-term sustainability have been briefly demonstrated in the following discussion. Coase Theorem The concerns associated with building interpersonal relationship regarding the individual efficacy creeps through taking into concern the conventional theorem ‘The Problem of Social Cost’, which developed by Ronald H. Coase. In relation to Coase theorem, the issues associated with impossibility in terms of making scientific comparison of interpersonal individual efficacy can be considered as one o f the problems of social cost. In order to effectively deal with the problems of social cost, the Coase theorem and its disciples play an essential role for the modern entrepreneurs to reduce optimum influence of externalities such as air or noise pollution (North, 1992). The Coase theorem of the firms tends to define economic efficiency concerning economic allocation with the