International Business Management-an Assessment Of The Role Of Multinational Corporation In Nigeria

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ABSTRACT

 

The main objective of this study was to look, at international business management and assess the role of Multinational Corporation operating in Nigeria, in terms of their contribution to the socio-economic and technological development of the nation. The study was carried out in some selected multinational and it covered staff (respondent), 120 in number with at least secondary education. Data were collected mainly through structured questionnaires interviews and other secondary sources. The MNC are contributing to the economics and technological development of the nation. The economic contribution is moderate while the technological contribution is in adequate. The MNC are socially responsible that is to say, they are contributing to the social development of Nigeria. But this contribution was found to be inadequate. Finally, the work was concluded with a recommendation on further research and conclusion of the

 

 

 

 

TABLE OF CONTENTS

 

 

 

Title Page …

i

Certification

  

ii

Dedication

iii

Acknowledgement

iv

Abstract 

v

Table of Contents

vi

List of Tables

ix

CHAPTER ONE:

BACKGROUND OF THE STUDY

 

1.1

Introduction

1

1.2

Objective of the Study

7

1.3

Scope of the Study

8

1.4

Limitation of the Study

8

1.5

Research Questions …

9

1.6

Significance of the Study 

10

1.7

Definition of the Terms

10

References

12

CHAPTER TWO:

LITERATURE REVIEW

 

 

 

2.1

The Inducement Factors and Entry Strategies

 

 

 

into Multinational Business

13

 

2.2

Entry Strategies into Multinational Business

14

2.3

Environmental Factor Affecting the MNC

15

2.4

The Managerial Functions in International Business 20

2.5

Management Policies and Strategies of MNC

25

2.6

The Role of MNC as a Business Unit …

31

2.7

Benefits of MNC to Host Countries

   ...

36

2.8

Activities of MNC in the Development of Nigeria …

38

2.9

The Shortcomings of MNC in Nigeria …

44

2.10

Summary of Literature Review

51

References

53

CHAPTER THREE:  RESEARCH METHODOLOGY

 

 

3.1

Sources of Data

59

3.1.1

Primary Data

59

3.1.2

Secondary Data

60

3.2

Data Presentation and Analysis …

60

3.3

Validity and Reliability of Measuring Instruments

60

CHAPTER FOUR:

DATA PRESENTATION, ANALYSIS AND

 

 

INTERPRETATION

 

 

 

 

4.1

Data Presentation

62

CHAPTER FIVE:          DISCUSSION OF FINDINGS, RECOMMENDATIONS AND CONCLUSION

 

5.1   Discussion of Findings                                                          94

 

5.2   Recommendations                                                                  101

 

5.3   Conclusions                                                                               104

 

Bibliography                                                                                      106

 

 

 

LIST OF TABLES

 

 

 

 

Table 1:

Sex of Respondent

62

Table 2:

Age of Respondents

63

Table 3:

Nationality of Respondents

63

Table 4:

Level of Formal Education …

64

Table 5:

What is the Name of Your Company?

65

Table 6:

How Long Have You Worked in Your Company 66

Table 7: What is Your Rank/Status in your Company?

67

Table 8:

Where is the Headquarters of your Company?

68

Table 9:

Which of the following Environmental Factors

 

 

Affect(s) your Company’s Operation in Nigeria? 69

Table 10: What Factor(s) in your Opinion Motivated your

 

 

Corporation into having Subsidiary Operations

 

 

in Nigeria?

70

 

Table 11: How would you Rate MNC Response toGovernment’s call for Direct Foreign Investment

 

in Nigeria?                                                                          71

 

Table 12: Do You Agree that Foreign Investment has theCapacity of Boosting the Nation’s Economy? 72

 

Table 13: Do you Think that MNC in Nigeria Should Play

an Active Role in the Socio-Economic Development

of the Nation?                                                                73

 

Table 14: How do you Rate the Contributions of yourCompany to the Economic Development of Nigeria? … … … … … … … 74

Table 15: How do you respond to the Association that MNCin Nigeria are mainly Interested in Profit Maximization … … … … … … 75

 

Table 16: Do you Agree that MNC in Nigeria do Repatriate

Huge Profit to Home Countries?

      76

 

Table 17: What Effect do you Think it will have on Nigerian’s

 

Economy if the Money Repatriated from it is

 

Higher than the Foreign Investment?

77

     

 

Table 18: If MNC do Contribute to Governments

Revenue Thorough, what Means is this Date?78

 

Table 19: The Operations and Existence of NC in Nigeriaoften Bring about Unfavourable Competition for

Local Firms                                                                       80

 

Table 20: Do You Think that MNC in Nigeria are

 

 

Contribution to the Technological Development

 

of Nigeria Encouraging?

81

TABLE 21: If yes is this Contribution

Encouraging?

82

Table 22: If your Company is contributing to the Social

 

Development of Nigeria, in What Areas are

 

they Doing this?

83

Table 23: Are these Contributions Adequate?

85

Table 24: How do you React to the Assertion

that

 

 

mainly Unskilled Indigenous Labour are

 

 

Employed by MNC?

86

 

Table 25: Expatriate Staffs of MNCS are paid betterSalaries than Indigenous Staff of some rank in the same Company … … … … … 87

Table 26:What is your view about the as Assertion thatSome Sensitive Management Position in MNC are

the Exclusive Reserve of Expatriates …

88

Table 27: If true, why is to so?…        

90

 

Table 28: How Does your Corporation Respond to Peoplein the Immediate Environment in case of

any Accidents (Natural Disaster Pollution etc?) 91


14

 

 

CHAPTER ONE

 

BACKGROUND OF THE STUDY

 

1.1   INTRODUCTION

 

National or domestic business not withstanding there is a literally a whole world out there for business to deal with. Just imagine, Coke (Coca-Cola product) is sold all over the world.

 

American motors is building its jeeps in Japan, Scores of Boeings Jetliners fly for various countries airlines. Peugeot is assembled in Nigeria, you may carry a sony portable radio, drive a Toyota car, wear Italian shoes here in Nigeria and any other part of the world. They are all prove or evidence of international business.

 

During the past three to four decades, the world has experienced the growth of an economic phenomenon the multinational corporation (MNC). Hicks and Gullet (1981), maintain that MNC are involved in the international business, through one exporting, licensing, franchising, joint venture, foreign branch or wholly owned subsidiaries.

 

Whole the MNC is not new, its importance, power and consequences have come to be appreciated fully only recently.


15

 

 

For instances, consider the significant role that large Multinational Oil Companies are playing in the economic systems of the World in General and Nigeria in particular. To press home point, hear what a former Managing Director (MD) of NNPC L.A. Amu, said about Nigeria economy.

 

“The Nigeria economy can largely be described as one with a strong petroleum industry superimposed over an undeveloped industrial base”. This is a kind of testimony of the positive role of Multinational Oil Company in Nigeria Economy. For without the oil companies, there would not have been an oil or petroleum industry in the initial place.

 

According to Megginson, et al (1988) “MNC are more than just giant business firms, for they tend to have social, and even political effects as well as economic ones in their host countries”. KINARD (1985) could not agree with this vie, when he said that huge corporations like MNC, play not only economic roles but also important political and social roles in their environments.

 

For obvious reasons multinational business has its own peculiarities. It involves different countries. Hence, it is


16

 

 

influenced by different environmental factors in these countries. Therefore international business management or multinational management is equally peculiar and challenging. Multinational managers have to formulate or device separate policies and strategies to survive in the different environment.

 

Though it is the responsibility of a country government, like that of Nigeria to imitate programmes and actions for her socio-economic growth and development, but governments’ resources more often than not appear inadequate to discharge those obligations effectively.

 

Megginson et al (1988) maintain the “MNC are more than just giant economic units.

 

In many cases, they are nearly a form of government, richer and more powerful than some of the countries in which they are operate. For example, in a typical year, the combined sales of Exxon, General Motors and Royal Dutch Shell Group exceeded the GNP of most industrialized nations of the World”. Hence, it is not out of place for society to expect and press these MNC to assume a key role in the socio-economic


17

 

 

development of their host countries. At least if for nothing else, they should endeavour to live up to their corporate social responsibilities. Meginson et al (1988) puts it this way. “Today’s international business firms are expected to contribute to the host nation’s economic growth and development as well as to produce a profit for the owners’. What they are saving is that MNC should not only be interested in profit maximization in their host countries, rather, they should equally assume other roles that will benefit the society as well.

 

These societal expectations and demands and other intricate issues in multinational business, as stated earlier, pose great challenges to the management of MNC. For example, any disruption to their operations as a result of crisis between the company and host country/community like the Ogoni-Shell dispute, will be detrimental to especially the interest of the company and to other interest groups.

 

Therefore, multinational managers have to strike a rather difficult balance between meeting societal expectations and demands as well as other business demands.


18

 

 

Multinational corporations have been praised by many people are agents of social, economic and technological development of their host countries on the other hand, however, other people feel an regards MNC as instruments of exploitation in their host countries. These two views are based on the extent to which the MNC have met the societal expectations and demand as well as business expectations and demands, in their environment.

 

There are many of such corporations operating in Nigeria. They are mainly American, European, or Asian corporations, and they are into high technology areas such as agriculture,, construction, mining, manufacturing etc. Some of them are coca-cola, Mobil, Julius Berger. Pfizer, Shell, Glaxo and KLM etc. Expectedly, there are diverse opinions regarding their impact or role in the country. Therefore, this research intends to present a clearer picture of their actual role in Nigeria here for a long time now. This fact not withstanding, Nigeria is still technologically backward.

 

Secondly, most of these MNC have been reported to recruit home-office personnel (expatriate managers) to fill key


19

 

 

executive positions instead of Nigeria managers. This does not help the unemployment situation in the country.

 

Thirdly, it is claimed by some people that the MNC in the country have contributed to the collapse of some domestic companies.

 

In addition, the host communities of some of the multinationals were constantly cried out that the MNC operating in their area are not socially responsible. The Ogoni-Shell Crisis is a case in point in this regard.

 

Moreover, it has been observed that these multinationals make the repatriate huge amount of profit always, with little or no reinvestments in the country. Also they appear to be interested only in profit maximization to the detriment of the nation. Base on the above, most people say that MNC are just another form of imperialism exploiting people in under developed nations in general and Nigeria in particular.

 

On the other hand, however, there are those who believe that MNC are positive forces of social, economic and technological development in their host countries.


20

 

 

As a result of the above contrasting views. It becomes absolutely necessary to carry out this research to assess the actual roles of the MNC operating in Nigeria.

 

1.2   OBJECTIVE OF THE STUDY

 

The board objective of this study is to look at international business management and assess the role of MNC operating in Nigeria.

 

The specific objectives of this study are:

 

a)           To ascertain whether the multinational corporation in Nigeria are social responsible.

 

b)          To ascertain whether the MNC in Nigeria have any contribution to the economic advancement of the nation.

 

c)           To ascertain whether they contribute to the technological development of Nigeria.

 

d)          To determine the environmental factors that influences the operations of the MNC

 

An attempt will be made to collate the activities of these corporations and examine their respective and collective roles in the development of Nigeria.


21

 

 

1.3   SCOPE OF THE STUDY

 

For obvious reasons, it will be difficult for a single researcher to study the activities of al the multinationals operating in Nigeria. This research therefore covered the socio-economic and technological contributions of selected multinational operating in Nigeria.

 

It is the intention of this researcher to arouse the interest of future researchers, students and other interested groups in the areas in question. This is so because; the researcher was not able to give an exhaustive coverage of this interesting and wide topic.

 

1.4   LIMITATION OF THE STUDY

 

An exhaustive and more detailed research of this topic would have been carried out but for some obvious constraints of time and finance.

 

Moreover, some staff of these, MNC were very UNCO-operative in respect of giving out information. Either the information sought is in a file with the inscription “out of


22

 

 

BOUNDS”. Some either said they were to busy to respond to questions or they were not allowed to.

 

1.5   RESEARCH QUESTION

 

The research questions for this research are:

 

a)           Are MNC in the country socially responsible?

 

b)          Are MNC contributing to the technological advancement of the nation?

 

c)           Are they contributing to the manpower development of Nigeria?

 

d)          Are the MNC in Nigeria most interested in profit maximization?

 

e)           What impact has the repatriation huge profit to home countries by MNC in Nigeria on the nation’s economy?

 

f)            What effect has the foreign investment of these MNC on

 

Nigeria’s economy?

 

g)           What effect has the operation and existence of these corporations on the local business firms?

 

h)          Are they helping to reduce the unemployment rate in Nigeria?


23

 

 

1.6   SIGNIFICANCE OF THE STUDY

 

This study will be a great significance because; it will put improper focus and will create awareness on the real role of MNC in Nigeria. It will show whether they are helpful or harmful to the nation. The findings will be useful to both government and the management of MNC in future development planning. Also it will be beneficial only social researchers, environmentalists, but students in international business management and academicians generally.

 

1.7   DEFINITION OF THE TERMS

 

International Business and international business management.

 

International business according to John et al (1984) refers to economic transactions that involve several countries, while international business management is simply the management of business transaction between citizens, companies, or governments of two or more nations.

 

Multinational corporations (MNCs) and multinational management. Kinard (1988) defined multinational corporations (MNCs) as business firms that produce and


24

 

 

market goods and services in more than one country. They include giants such as shell, UTC, Royal Dutch, Coca-cola etc.

 

According to Hicks and Gullett (1981) multinational management refers to the management of business activities that cross national boundaries. The simple implication of the above definitions to that MNCs are in international business.

 

Aharani (1971) noted that there are some debates as to when an organization can be characterized as a multinational. the fact remains that, the organization will have to be headquartered in one country (mostly developed countries) and have to have business operations spread over other countries. For these corporations, the degree of internationalization and international commitment may cover a wide range.

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International Business Management-an Assessment Of The Role Of Multinational Corporation In Nigeria

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