BENEFITS OF MULTINATIONALS

Benefits of Multinationals to the World

Benefits of Multinationals to the World

Introduction

Multinational company is more often a large corporation that has established several overseas subsidiaries in several countries with a dominant strategy and is expanded around the world. After the creation of multinationals has been controversy over the various definitions we have of it, some define it as any company that keeps economic transactions on more than one country, others say this should not be limited only to holding operations outside the borders, but must also have capital and personnel from different countries (Tolentino, 2000, 58-69). There are different types of corporations that exist that are ethnocentric firm: they target your nation and its subsidiaries are controlled by the matrix , the system is according to accounting practices used in the country of origin, there is a domain permanent parent; polycentric company (Tolentino, 2000, 58-69). A multinational corporation is a company that produces economic effects in several countries. Internationalization of a company addresses five key determinants:

In order to seek direct access to raw materials particularly during the colonization

The need to bypass certain barriers to trade; such as, production in the market where the product will be consumed in order not to be affected by tariffs on imports

The search for potentials markets due to increased competition in the existing market. Moreover, once a firm adopts this strategy is likely to be imitated by competing firms

The loss of a technological advantage in the domestic market may force firms to produce abroad at lower cost, in order to continue to produce profitably

The search for lower labour costs.

Discussion and Analysis

Impact of Multinationals on World

The definition of impact refers to the action and effect of impact. This implies a significant change to the world; this change may have both negative connotations as positive. Perhaps the most important impact of the MNEs on the various economies is illustrated from the process of investment that they made. Immediately after the Second World War, FDI was concentrated in the commodities sector, a situation that gradually changed until the current situation, in which MNEs retain most of the exports of manufactured goods and the sector continues to spread services (Birkinshaw, Ghoshal, Markides, Stopford, Yip, 2003, 75-83).

The growing importance of FDI in production means that nationalization would deprive an economy of flows in which the new technology (Venables, 2005, 02-07). On the other hand, this competition to be recipient of FDI in the service of the MNEs generates various national privatization processes. Investment contributed by the MNEs contributes to growth and employment in the countries that are fortunate enough to attract it (Mockler, 1999, 89-102). But if we compare the figures of the top 100 companies for 1993 and 1997, it is found that these companies have increased their turnover by almost 20%, while decreasing the number of employees (Venables, 2005, 02-07).

The MNEs provide jobs, directly and indirectly to not less than 10% of the global workforce potentially available. In developing countries, MNEs employ not less than 2% of people ...