Analysis of multinational Companies

Analysis of multinational Companies

There has been an emergence of many businesses in the present world, mainly because unemployment has led people to seek alternative sources of income. For this reason, therefore, a majority have started different kinds of businesses with the hope of attracting customers to boost their business. The majority may be looking for networks both locally and internationally to help with ideas on how to improve, increase customers to the market. Eventually, due to networking, many businesses prosper and expand domestically and globally. A multinational company is enterprises that operate in their own country as well as many other countries. They, however, have their central office located in one specific country that can coordinate the administrative management of all the other office branches. These multinational companies can establish and offer services in at least two or more Countries. To be able to know whether multinational companies benefit or cause harm to the countries hosting them is the reason for this research.

This research paper seeks to examine both the positive and negative effects of Multinational companies, mostly in developing countries. Some of these developing countries have low levels of development. Therefore, it is essential to gauge if the multinational companies benefit these countries to some extent or bring their downfall. Currently, some of the top 10 best multinational companies in the world include; Microsoft Company, Nokia company, Toyota company, Intel company, Coca-Cola company, Sony company, IBM company,  General electronic company, Nike company, and Citi group companies.

There are some features that multinational companies may associate. One is, having high turnovers with very many assets. Their businesses are usually large, with so many physical and financial assets. These companies set very high targets which, when achieved, can bring high turnovers and profits. Offices of a multinational company located in other countries always receive management and command from the mother country. They also use capital intensive technology to achieve growth in their productions and business marketing. The vast amounts of wealth and many investments give them the advantage of using high-level technology to boost returns and the entire company. To attract the international market, multinational companies invest a lot of money in business marketing, promotional events.

Multinational companies are set up in different models, in which they operate. A centralized model is where the specific company puts up its headquarters in their own home country of residence. They, however, set up manufacturing plants and production amenities in other developing countries that charge low manufacturing costs. In a centralized multinational company, administrative management may channel from the headquarters to the various branches in other countries. The different transnational model is known as regional, where a company keeps its base not necessarily in their own home country, but in any Country. They can then be able to supervise their many offices located in other different countries. This particular model includes businesses and many other partners that report to their main headquarters. Finally is the multinational model, which has its parent company operating in the home country but has its businesses in many different countries. In this particular model, involved businesses and partners are autonomous in their operations.

Many multinational corporations take place because of many reasons. One of the reasons is to get access to lower production costs in most developing countries; hence setting up a manufacturing plant may be cheaper too. There is also a need for closeness to international markets for the kind of merchandise produced.  Commodities manufactured by the multinational company may have its buyers in another country. To avoid the cost of transporting to the target market, most companies prefer setting up a production plant in a country that has the ready market. Also, most companies prefer setting up their businesses in Countries that do not charge high production costs and also exempted from specific measures from the Government.

Being a multinational company comes with so many benefits. Establishing a branch in the countries where there’s a ready market improves its efficiency. They are also able to purchase raw manufacturing materials cheaply hence reduce costs. Employees of multinational companies are paid well than for local companies, therefore, attract local labor since more people would prefer to work with them. The multinational companies may benefit from the Government because they pay taxes, which boosts a countries economy. Whenever a multinational company sets up branches in any country, it hires local community members as employees. These community members have an advantage because they are well vast with the local culture. The community members embrace the company and are ready to purchase goods because of good relationships with their own. It is an advantage for the company since their products will be well accepted, and marketed through spreading the word and giving feedback. The local community members employed will help to provide feedback to the company on what locals want and areas to improve on and products doing well.

The multinational companies’ experience with both local and international and international markets has exposed them to more extensive knowledge of market needs. Through this, they can improve on their innovations on new products to please their customers wherever they are — many lessons learned how to develop marketing strategies hence more customers leading to more market expansions.

Research shows that not all businesses considered being multinational. To have a look at the characteristics of multinational companies indicate that; a transnational corporation must meet certain conditions. One of these conditions is that the business company must have vast amounts of financial and physical assets and must be able to make huge profits by meeting all targets. The companies must also have branches in two or more countries with offices set in all the departments. Management and control of all office branches must have a central control from the main branch in the company’s own home country. The multinational company must show evidence of some growth by upgrading and doing purchasing and mergers. Production and marketing of these companies must use sophisticated technology like the capital-intensive for their investments to continue growing. Also, to handle colossal funding, manage other employees, run a vast business body, and use advanced technology, the multinational company must employ only the best qualified professional managers. To ensure they sell their product and increase the customer base, the multinational company’s needed to invest considerable funds in marketing and promotions. Important because no business can flourish without proper marketing, for it attracts more customers to boost a business. Finally, manufactured goods must also be of high quality and attractive to consumers.

Multinational company’s conduct their business operations in other countries hence influencing the economic status of that particular country through massive investments. Research conducted has shown that multinational company’s influence the host country positively and negatively. The many ways in which developing countries can benefit are seen through; reducing poverty of a country by employing its citizens and paying better wages than the local firms, thereby growing a country’s economy.  Technology and knowledge transferred from the company’s home country to developing countries. Besides, the multinationals improve and build infrastructures leading to more developments.

Despite the many benefits experienced by developing countries hosting multinational companies, exploitations felt. Such exploitations experienced by developing countries include; causing pollutions through manufacturing industries, damping harmful wastes to the environment causing health risks. Human rights violated through abuse of vulnerable groups such as children, the elderly, and the disabled. The community members employed paid low wages than the intended amounts.

Studies have shown that the mother country of the multinational company also benefits in some ways. As they continue to operate in other countries, revenues return to the mother country. All dues, royalties, proceeds, and chargers from host countries are collected and taken back to the mother country, contributing to economic growth. Partnerships created between the host and the mother country. Such corporations are healthy for shared knowledge and networking. Increased movement of people within those countries for further collaborations and development. The developed countries and developing countries benefit from trade relationships

Some myths and misconceptions about multinational companies heard over a long period. Mostly religious leaders have always troubled when they see the presence of multinational companies, mostly in developing countries. Concerns such as those are accepted if allegations brought about are real. Some concerns brought forward indicate that the multinational company intends to exploit developing countries. Also, there are feelings that such a company’s aim to eliminate domestic firms to dominate and exploit. Because of the pollutions brought by manufacturing and productions in multinational companies, many have felt that intentions are to bring diseases so that developing countries can continue depending on such company’s.

Even though multinational companies can permeate the business environment of many host countries in developing countries, there are challenges they face through ought the globe. Problems experienced in industrial areas, in this case, when a countries economy is affected through wars, elections, floods, and so on, then the multinational company’s business may be affected negatively.

Sometimes high cost of labor may be experienced from other host countries — the increased cost of business operations, leading to a decrease in profit margins. Difficulties encountered in maintaining efficient services in the supply chain because of many long processes required. The methods may be expensive and lengthy. Due to a conflict of interests in the host countries, the Government of the host may implement regulations to hinder the multinational company from carrying its intended operations. The political instability of some host counties may negatively affect the multinational company hence hindering prosperity.

Other global risks experienced by the multinational company may include; cyber-attacks by hackers, scammers, and other technological threats that affect the businesses. Sometimes high market competitions may lead to companies not performing well, causing the closure of such companies. Finally, it may not be easy to retain top talents in the market, causing the multinational company to struggle.

In conclusion, to follow ethics, multinational companies must conduct assessments on daily operations. One must have extensive knowledge of what is involved in such businesses and must follow any cultural practices of host counties. Regulations and ethical frameworks in countries they operate observed. Despite the many challenges they face, they must work toward delivering quality services to the targeted market by improving product quality. The host country should not experience any exploitation whatsoever. Knowledge of existing risks must be looked into, to ensure success in a multinational company’s operations.