The Multinational Enterprise
94. What are guest workers?
Some countries, such as France, will allow the immigration of foreign workers on a temporary
basis when needed.
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
United States – PA – DISC: International trade and fi – DISC: International trade and finance
Multinational Enterprises as a Source of Conflict
95. Are there any differences between the theory of multinational enterprises and conventional trade theory?
There are major differences. The conventional model assumes that commodities are traded
between independent, competitive businesses. However, multinational enterprises are often
vertically integrated businesses with substantial intrafirm sales. Also, multinational
enterprises may use transfer pricing to maximize overall company profits of any single
subsidiary.
United States – BUSPROG: Promotion – BUSPROG: Analytic
United States – BUSPROG: Reflective Thinking
United States – PA – DISC: International trade and fi – DISC: International trade and finance
International Trade Theory and Multinational Enterprise
96. What are the disadvantages of forming joint ventures?
A joint venture is a cumbersome organization compared with a single organization. Control is
divided, creating problems of “two masters.” Success or failure depends on how well
companies work together despite having different objectives, corporate cultures and ways of
doing things. The action of corporate chemistry is hard to predict, but it is critical because
joint-venture agreements usually provide both partners an ongoing role in management. When
joint-venture ownership is divided equally, as often occurs, deadlocks in decision making can
take place. Even when negotiated balance is achieved, it can be upset by changing corporate