Multinational Corporations

Multinational Corporations

Multinational Corporations

Introduction

Today multinational companies are not given that much favor on the international basis and on the government level. This is not the starting of this issue as this has been gone through our views. In the early 1960 the multinational companies in America were dominating throughout the world. Then in 1980s this perception had changed. Then the companies which were being considered evil were now being changed to icons that were progressing in the integrating world with a positive influence. However today the perception has changed again and the multinational companies are being out of favor. Today multinational corporations have grown so big that they even challenge nations of average size and the democratic institutions. Today these multinational have become some powerful that they can even destroy the fabric of democratic society.

If we compare the size and structure of corporations in term of GDP with that of the nations we see that the sales of the corporations are invariably against the GDP of nations. According to studies in a research of top 100 economies in the world, 51 of them were corporations and 49 were countries in terms of GDP. However, the GDP and the sales cannot be compared. The GDP of a nation can be described as the total number of contribution the producers make for it.

Discussion

Growth of Multinational Corporations

Today multinational corporations have become so big that they are threatening the political, social and cultural value of nations. To some extinct we can say that the multinational companies are not as huge as being said. However the growth they gained is much faster than the nations. Corporations have a decent amount or power and this power has increased in the past years. In terms of economic power we say the capacity of multinational corporations to enforce a price that may exceed the marginal costs in order to make extra profits. The level to which the multinational corporations are able to do that depends on two aspects. First is the substitutability of products and services that the multinational corporations sell. If the buyers have easy alternative then in that case the corporations would not be able to take the charges and prices that can meet their excess marginal cost. Secondly it is the aspect of competition. If there are less number of competitors then the corporations can charge high above the marginal costs in order to create more profits. In terms of monopoly this is at the highest level today. (Grauwe, 2002)

It was predicted back in ages that the capitalism in later years would lead countries and corporations to create monopolies. This can be discussed through the political power of big and multinational organizations. However the political power is much hard to be predicted and measured if compared to the economic power. Also the political and economic powers can be related. A successful organization removes competition and competitors depending on the type of their products and services and the ...