Strategic Management: Formulation and Implementation

Factor Availability And Price Differentials

Where demand standards are high and there is a sophisticated supply capability of components, parts and raw materials, as well as supportive technological and communication infrastructure, the manufacturing methods pursued by MNE affiliates are likely to be more technological intensive than in the absence of these conditions.

There is a general consensus among researchers that because of the assetsspecific advantages of MNEs and the differential response of foreign affiliates and domestic firms to the environment system and policy characteristics of the countries in which MNEs operates, there are important differences in the selection of all forms of technologically related inputs.

For example, findings found that a substantial modification in production processes is only likely to occur in medium to low technology importsubstituting industries in developing countries. In the case of some consumer good products technology, MNEs have made some design et al. modifications to take account of different factors costs, especially where host governments have encouraged this by employment premium etc, or where the local market is a large one.