Why does multinational companies fail to meet their objectives in host countries?

Answer 1

Mainly because they fail to acknowledge and account for the cultural differences between the company's home country and that of the host country. They assume that what has made them successful on their own turf will automatically work everywhere else they expand to. Consider the difference in the way that business is conducted by many companies in Europe vs. the US. Whereas many employees are bound to their organizations by contractual obligations in the EU, the US primarily observes the employment-at-will policy. So, a European organization hoping to transport a bureaucratic management structure to their US-based operations may find themselves rapidly losing top talent and ultimately market share because US employees will go where they are valued and respected - not where they are "told what to do."