- “Other Than The Obvious Facts That They Are Large And Operate In More Than One Country, Multinational Corporations Are Essentially No Different From Other Firms In That They Are Motivated To Maximise Profits.” Discuss
With the expansion of the free trade and globalisation, there appears to be another significant player in the global business environment the multinational corporations (MNCs). These entities operate in more than one country; they are relatively larger in size and share the profit maximization goal as any other business. MNCs have greater access to and participation in the reallocation of the factors of production capital, labour, etc. on a global scale which creates some side effects to the overall appreciation of their activities. So, what makes them different from the other market players? Scrutinizing the internal perspective, we will find out that these companies additionally manage very complex structures and deal with different cultures and legislation in order to maintain the required profitability. From the external perspective, there is the public perception of their operations. They are seen by the local competitors and antiglobalists as unethical and immoral, abusing their political power, destroying the national economy and leaving many people unemployed. For the developing governments and free trade supporters MNCs are strategic investors for the national economy, introducers of new technologies and know-how.
“…our values are just like yours …” (Toyota Motor, www.toyota.com)
Companies start business with the ultimate objective to earn profits and/or increase their wealth. Investing the money of their owners in various projects aims at earning higher return in exchange of acceptance of certain risks. To achieve this goal different companies employ different strategies depending on their size, access to resources, demand, competitors etc. In this respect MNCs are not that different from any other business entity. The profit maximization formula takes into account the same variables. They employ resources, penetrate markets, compete with other companies etc., considering though both local national and global perspective levels. Being large and...
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