International Business. Multinational Enterprises Case Study

IBM as a Multinational Enterprises - Case Study Example IBM is one of the only nine companies in the Fortune 500 companies to be considered global. A company's recognition as being global is only measured by the percentage of their revenue from different markets. The three triad major world markets: North America, Europe, and Asia, are considered when companies are measured. According to the rules for a company to be called global, the revenue from each of the three major markets must be greater than 20% of the total revenue of the company (2006). In the case of IBM, it passed the test since IBM's revenue from all the three major world markets exceeds 20% of the total revenue. The company gets 42.7% of its revenue from North and South America, 32.7% from Europe, and 21.6% from Asia. Other big companies can be considered multinational enterprises, but not global companies. The number of countries IBM operates in, along with the vast availability of its products throughout the world is sufficient to conclude that IBM has a global reach. IBM interests the masses of other countries, and that is why it is the largest firm in its industry. IBM started to expand beyond national borders through the merger of its Canadian predecessors and establishing and maintaining a special relationship with its customers. According to the case presented, IBM expanded with speed and commitment into many different markets of the world. Contract manufacturing is outsourcing manufacturing tasks to other firms. In IBM's case, the company uses contract manufacturing to manufacture a lot of its products in different parts of the world. IBM's strategy is to remain a global company, and contract manufacturing fits in perfectly in IBM. Contract manufacturing allows the company to expand faster than if the company would manufacture everything directly from the host country. Furthermore, it saves a lot of money and time for the company because production facilities are not to be purchased, as it would be the case if IBM decides to manufacture them. It also involves getting the most out of the workforce. Local firms would know more about how to utilize their resources in the best possible way, and hence, local firms would a better job at managing local resources. Moreover, consumer tastes and demands differ in each country, so it is beneficial to use the knowledge of contractors about the home market. The contractors know mor e about the market for technological products in the home market. Furthermore, with specific assistance from IBM, the local firms can provide an IBM product with specific customization tailoring to the local population. Part of the reason for IBM's success in other countries is contract manufacturing. IBM would have to deal with a lot of issues such as location, availability of human resources and technology, training, market research, and government rules and regulations etc. To better minimize the risk of getting others to do the company's work, IBM has created six research centers across six countries to ensure that these centers conduct research in their region.