The Relationship between MNEs & SMEs Essay Example | Topics and Well Written Essays - 2000 words

The Relationship between MNEs & SMEs - Essay Example Global dominance of the TRIAD and the MNE’s within it will be gone forever. 1. The relationship between MNE’s within the TRIAD and SME’s in low cost economies and characterise how TRIAD MNE’s have sustained their dominance within international markets. The relationship between MNE’s within TRIAD and SME’s in low cost economies has been particularly based on the intricate dynamics of global trade with the former dominating the business environment while the later simply working towards developing a niche in the vast international market (Royd et al, 2004, 94-96). Therefore, MNE’s have been significant in developing global supply chains and other complex networks in low cost economies which saw the rise of SME’s in those countries. As a result, the connection between MNE’s within TRIAD and SME’s in low cost economies is diverse in the sense that the aspect of market competition and economic rivalry has prevailed link ing the two in which MNE’s have been perceived as dominating the market in low cost economies at the expense of local SME’s. ... sing the link between MNE’s and SME’s, it is necessary to focus on the business environment in low cost economies prior to the entry of TRIAD MNE’s and how their activity spurred growth among local SME’S. There is a symbiotic relationship linking TRIAD based MNE’s and SME’s in low cost economics whereby MNE’s are perceived as potential partners on economic growth and expansion of trade linkages and thus welcomed and supported by the local SME’s through supply networks and other business cooperation mechanism(United Nations, Transnational Corporations and Management Division, 1993, 65-71). As a matter of fact, the relationship involving SME’s and MNE’s has been bolstered by governments and other trade agencies in low cost economies who have realized the huge potential of trade linkages involving the two. Therefore, low cost economies have laid several incentives in place for MNE’s to cooperate with SMEâ€℠¢s creating a dynamic liaison that is beneficial to trade. Attracting MNE’s particularly those with manufacturing plants has become the focus of most local economic development agencies that endeavour to promote an enabling environment for the respective MNE’s due to the many benefits associated with MNE activities in local businesses. Apart from the creation of job opportunities in low cost economies, MNE’s have been identified and credible agents in the development of strategic clusters in low cost economies that could spur economic development. More particular has been the fact that MNE’s can augment the development of SME’s in low cost economies through purchasing inputs and material components thus creating niche for local businesses. The connection involving MNE’s of TRIAD and SME’s of low cost economies are primarily based on