Strategic R & D by TNCs in Developing Countries TNCs have had long units

1
International Businessinfo_at_casestudyhelp.in91
94220-28822
2

• International Business
•  
• CASE (20 Marks)
• Strategic R D by TNCs in Developing
  Countries TNCs have had long units in developing
  host countries for adapting products and
  processes to the local conditions, and in a few
  cases, to products for local markets. Since the
  min1980s, however, they have also started
  locating strategic R D centres in some
  developing countries, for developing generic
  technologies and products for regional or global
  markets. The main incentives for this are (a)
  access to highly qualified scientists as
  shortages of research personnel emerge in certain
  fields in industrialised countries, (b) Cost
  differentials in research salaries between
  developing and industrialized countries, and (c)
  rationalisation of operations, assigning
  particular affiliates the responsibility for
  developing, manufacturing, and marketing
  particular products worldwide.

3

• The new trends are more visible in
  industries dealing with new technologies, such as
  microelectronics, biotechnology, and new
  materials. In these technologies, the location of
  R D can be geographically delinked more easily
  from the location of manufacturing. It is also
  possible to separate R D in core activities
  from that in noncore activities. Consequently,
  countries like India, Israel, Singapore, Malaysia
  or Brazil serve TNCs as good locations for
  strategic R D. For instance, Sony Corporation
  of Japan has around nine R D units in Asian
  developing countries. It has three units in
  Singapore conducting R D on core components
  such as optical data shortage devices, integrated
  chip design for audio products and CDROM drives,
  and multimedia and microchip software. It has
  three units in Malaysia working on video design,
  derivative models and circuit blocks for new TV
  chases, radio cassettes, discman and hifi
  receiver designs. It has one unit in Republic of
  Korea focusing on the design of compact discs,
  radio cassettes, tape recorders, and car stereos.
  It has one in Taiwan designing and developing
  video taperecorders, minidisk players, video CDs,
  and duplicators.

4

• Finally, it has one unit in Indonesia
  focusing on the design of audio products. Such
  units often work in collaboration with science
  and technology institutes in the host country.
  For instance, Daimler Benz has established such a
  unit in Bangalore, India, in collaboration with
  the Indian Institute of Science to work on
  projects related to its vehicles and avionics
  business. Current work includes interface design
  of avionics landing systems and smart GPS sensors
  for use by the groups business worldwide.
  Source World Investment Report 1999.

5

• Answer the following question.
•  
• Q1. Explain why MNCs have located R D centres
  in developing countries?
•  
• Q2. Mention the areas where R D activities can
  easily be decentralized

6

• www.casestudyhelp.in
• info.casestudyhelp_at_gmail.com
• info_at_casestudyhelp.in
• 91 94220-28822