PhD Nezhenets E. V., Shtanko О. D., Мettsger А. А.

Oles Honchar Dnipropetrovsk National University, Ukraine

MULTINATIONAL CORPORATION’S DEVELOPMENT STRATEGY

Multinational corporations are an essential element of the global economy, international trade and international economic relations. Their rapid development in recent decades reflects a sharpening of international competition and the deepening of the international division of labour. Multinational corporations, on the one hand, is the product of the rapidly developing international economic relations, and on the other hand, is a powerful mechanism of action on them. Companies usually develop their strategy and stick to it, because multinational corporations are involved in global economic competition. Basis of modern development strategies of multinational corporations is the process of concentrating resources in multinational corporations own strategic advantages, which include marketing, development and implementation of research and development, as well as developing services that improve customer loyalty.

For Ukrainian multinational companies attractive sectors are chemical industry and metallurgy. This situation is explained by the fact that in these branches Ukrainian multinational corporations have a competitive advantage in the global market. To the largest multinational companies in Ukraine include «UKRAVTO», «Industrial Union of Donbass», «ROSHEN», «System Capital Management», «Ostchem Holding AG», «HADO» and others. The list of multinational corporations has large and medium companies, that operat in the international market and are based in Ukraine. Each of companies has its own peculiarities of functioning due to the specifics of activity, market demand and geographical orientation.

Global companies occupy the major part of international business. They have not a clear national identity. Among the multinational field of its activity are dominated multinational corporations.

Global companies occupy the major part of international business. They do not have a clear national identity. Among the multinational field of its activity is dominated multinational corporations. At present there is no generally accepted definition of multinational corporations, but in most cases by a transnational corporation understand multinational financial and industrial, scientific, technical, trade and service association, performing operations, both in the home country and abroad. Since multinational corporations participate in global economic competition, each company usually sticks to its strategy. Competitive strategy by Porter is defensive or offensive actions aimed at achieving strong positions in the industry, at the successful overcoming of the five competitive forces and at thereby to obtain higher returns on investment. Although Michael Porter acknowledges that companies have shown a lot of different ways to achieve this goal, he insists that outperform other firms only possible through the three internal consistent and successful strategies:

1) Minimizing costs.

2) Differentiation.

3) Concentration.

According to the first strategy, the company is focused on obtaining additional profit by saving on fixed costs, which are formed as a result of maximizing sales, giving expensive programs and projects. This strategy occurs often. It is effective, if price competition is the main discharged product standards or uniform, buyers are mostly large and it is difficult to switch from one supplier to another.

The essence of a differentiation strategy is to concentrate the efforts of the organization in several priority areas where it tries to achieve superiority over others due to uniqueness. Differentiation may concern product diversity, its quality, value added services, production conditions, it carries significant costs and be successful in the case if the profit will cover them.  

Focus strategy is to select a particular segment in the industry and is aimed solely at him. A certain group of customers should highlight the company from the competition and the challenge of it look attractive to buyers in this segment. Problems of this strategy is working with a small target audience, the company will have higher costs than the one that works for the entire industry.

After considering various development strategies of multinational corporations, it can be concluded that the Ukrainian corporations need to shift from price competition to more effective strategy that successfully apply global companies, such as differentiation strategy or concentration. These strategies will allow Ukrainian multinational corporations improve the properties of the goods or brands that give a company a certain superiority over its direct competitors, to increase market share, which increases revenue, even if the prices are comparable to the prices of competitors. You can also create a specific system access to the product, for example, an innovative system of sale or delivery of the product and thus create a competitive advantage, and the revenues cover the investment costs and the costs associated with the creation of a strategy of differentiation or concentration.

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