A Research Paper On Popular Multinational Corporations Around The World
In reference to Market Business News, a multinational company or transnational corporation in North America, is a business with branches, offices or production facilities in more than one country. The two main characteristics of MNCs are their large size and the fact that their worldwide activities are centrally controlled by the parent companies. There are different models of multinational companies; the first one is centralized, whereby companies put up an executive headquarters in its home country and then build various manufacturing plants and production facilities in other countries. Its most important advantage is being able to avoid tariffs and import quotas and take advantage of lower production costs. The second one is regional model that states; a company keeps its headquarters in one country that supervises a collection of offices that are located in various countries. Unlike the centralized model, the regionalized model includes subsidiaries and affiliates that all report to the headquarters. The final one is, multinational model, a parent company operates in the home country and puts up subsidiaries in different countries. The difference is that the subsidiaries and affiliates are more independent in their operations. For companies to expand they build on prior success, then expand their marketing organizations abroad, switching from using export agents and other intermediaries to dealing directly with foreign agents and distributors. As increased communication with customers reduces uncertainty, the firm might set up its own sales subsidiary and new service facilities, such as a warehouse, with these marketing activities culminating in the control of its own distribution system. The paper will seek to mention some of the popular multinationals around the world, their brief history and reason for going multinational, not only that but to understand their influence in the host country both positive and negative, plus to denote some of the reasons they would prefer to branch out of their nations.
To begin with popular multinationals, Apple, this is an American technology company and has its headquarters in Cupertino, California. Apple designs, develops and sells electronics, computer software and online services. iPhone smartphone, the iPad tablet computer, the Mac personal computer, the iPodportable media player, the Apple Watch smartwatch, the Apple TVdigital media player, the AirPods wireless earbuds and the Homepod smart speaker. Apple’s software includes the macOS, iOS, iPadOS, watchOS, and tvOS operating systems, the iTunesmedia player, the Safari web browser, and the iLife and iWorkcreativity and productivity suites, as well as professional applications like Final Cut Pro, Logic Pro, and Xcode. Its online services include the iTunes Store, the iOS App Store, Mac App Store, Apple Music, Apple TV+, iMessage, and iCloud. Other services include Apple Store, Genius Bar, AppleCare, Apple Pay, Apple Pay Cash, and Apple Card.. Apple was founded by Steve Jobs, Steve Wozniak, and Ronald Wayne in April 1976 It is also the world’s third-largest mobile phone manufacturer after Samsung an d Huawei. Apple branched to other countries to boost sale of its products.
Microsoft Corporation headquartered in Redmond, Washington USA. Microsoft generates revenues from the development, the production, the licensing and the supporting of computer – related products. To be more specific, products related to software applications, operating systems, PC’s programs and accessories. Some of their products and services include; Windows Vista, Windows XP, Windows 7, Internet Explorer 8, Microsoft Office, and the Xbox 360 game platform, Xbox game titles, PC games, PC/Xbox accessories. Mobile phone’s operating systems and everything else. It was founded by Bill Gates and Paul Allen.Microsoft is a typical multinational company that operates and retains offices in over 100 countries. In addition, it sells products to over 150 countries. As a result, great part of company’s revenues is coming from outside the USA. Its greatest benefit to host countries is the job creation attribute.
Facebook Incorporated. is an American multinational corporation headquartered in Menlo Park, California. It maintains a vast social network, providing access to professional and user-supplied content, audio/video connectivity, gaming, mobile applications and advertising platforms. It was founded and launched in February 2004 by Mark Zuckerberg and cofounders Dustin Moskovitz, Chris Hughes and Eduardo Saverin. Facebook is credited with bringing social media to the forefront of popular global culture, it dominates the social media industry Zuckerberg partnered with two fellow Harvard students, Dustin Moskovitz and Chris Hughes, with the idea of taking the platform to the next level. Facebook began to rapidly gain members. Facebook had gained one million active users. In an attempt to capitalise on seemingly large demand, Zuckerberg and his partners began adding colleges, high schools and international organisations to the growing Facebook framework. Regarding the above information Facebook founded more branches to accommodate the millions of people all over the world who needed social media.
Johnson & Johnson is an American multinational medical devices, pharmaceutical and consumer packaged goods manufacturing company founded in 1886. It has more than 260 operating companies in 60 countries selling products around the world. It has research facilities in more than a dozen countries and operates about 125 manufacturing facilities in North America, Asia, Europe, and the Middle East. The diversified health care giant operates in three segments through more than 260 operating companies located in more than 60 countries. Its Medical Devices division offers surgical equipment, monitoring devices, orthopedic products, and contact lenses, among other items. J&J’s Pharmaceuticals division makes drugs for an array of ailments, such as neurological conditions. Johnson and Johnson expanded their products as they needed to distribute and help the needy all over the world, with amazing health care.
Deloitte Touche Tohmatsu International (DTTI) is the fifth-largest accounting and business services firm in the world, and one of the prestigious Big Five accounting firms that dominate public accounting, in years to come developed management consulting tools. William Welch Deloitte opened his first London office, in 1845 and devised the double entry accounting system to help the Great Western Railway to deal with its large capital stock. In those days, as companies grew, due to their size and complexity, new problems were presented over how to depreciate fixed capital. Accountancy became indispensable to any well-run business, and the practice of accountants has roughly paralleled business trends. Due to its global practices and aggressive growth strategy to maintain its footing in the increasingly consolidated accounting and business consulting industry. It branched to the rest of the world. Deloitte has grown into an international network of more than 286,000 professionals in more than 150 countries and territories.
The Coca-Cola Company, American corporation founded in 1892 and today engaged primarily in the manufacture and sale of syrup and concentrate for Coca-Cola, a sweetened carbonated beverage that is a cultural institution in the United States and a global symbol of American tastes. The company also produces and sells other soft drinks and citrus beverages. With more than 2,800 products available in more than 200 countries, Coca-Cola is the largest beverage manufacturer and distributor in the world and one of the largest corporations in the United States. Headquarters are in Atlanta, Georgia. Coca-Cola had been a monopoly for soft drinks and bottled water for a predominantly long time. According to research it opened up branches to help in distribution of its products. This allowed the creator of the drinks time and room to keep inventing and look into other products.
Following are the positive effects of Multinational companies, economic growth measures the nation’s prosperity. Its an activity in general to assess the core competencies of a nation and it’s innovation, and use the of available resources. It greatly improves the social well-being as well as economic conditions of the nation. They bring with them huge investments and capital. Through subsidiaries, joint ventures, branches, factories they promote rapid industrial growth. In fact, MNCs are known as the messengers of progress.
A multinational corporation helps the technological growth of the country as well. Innovation is what helps entrepreneurs take ideas and successfully convert them into a business. Innovation is also a fresh way to look at things, approach situations, interact with people and many other things. Innovation and creativity somewhat go hand in hand. And both are extremely important in entrepreneurship. Steve Jobs says he truly believes that people with a true passion can change the world for the better. New and creative ideas come to people who follow their passions with hard work and persistence. Reduce the host countries dependence on imports. Imports reduce while exports from the country see a rise. All MNCs have enormous capital and resources at their disposal, promote maximum utilization of the country’s resources. This, in turn, leads to economic development.
The investment level, employment level, and income level of the host country increases due to the operation of MNC’s. Companies that are not from mother country always seem attractive. This strikes the business sense of local investors to investigate further on the business side of the new companies, allowing them to make profits, as they pump money into them. Other way of staying invested, would be to seek employment in the new companies. As it is indicated in some business laws that a foreign company has to give employment to a percentage of locals. New companies with foreign acclaim also seem attractive to local consumers. They have led the foreign companies to profit from their demand as the multinational has to keep the supply going. A win win situation for both host and multinational.
Merits that Multinational companies offer to own countries; the first one is they make their own countries rich, and these are some of the ways; the corporation will collect fees, royalties, profits, charges from all their host countries and bring them back to the home country. This huge inflow of foreign exchange is very beneficial to the home country. Multinational companies also provide a means of co-operation between developed countries and developing or underdeveloped countries. This allows both to benefit from the partnership. Partnership is defined as, the relation between two or more persons who have agreed to share the profits from a business carried on by either all of them or any of them on behalf of/acting for all.
These multinational corporations also help promote bilateral trade relations between countries. This is beneficial to both the countries and the global market and economy. Bilateral trade is the exchange of goods between two nations promoting trade and investment. The two countries will reduce or eliminate tariffs, import quotas, export restraints, and other trade barriers to encourage trade and investment. This also brings; supporting and improving existing trade agreements, promoting economic and development abroad.
MNC’s create opportunities for marketing the products produced in the home country throughout the world. This is evident as new products and services appear more attractive than the local products. A new broom sweeps clean philosophy. A consumer buys a product, takes it home and appreciates it. The consumer talks to a friend or neighbor about the product. The new consumer gets the product and the cycle continues. A profit to the multinational as its goods and service are being purchased.
Cultural awareness is groomed because of multinational corporations. Multinational companies are amazingly diverse, giving them additional power because of this diversity. By the time multinationals invest into host country, they have studied that country and this provides a way forward for their products and services. They do this to honor other cultures, and find out how to influence them. When each person expands their reasoning to include new viewpoints, the planet becomes a healthier place because of that action. These organizations provide a resolute influence on cross-culture information when this advantage becomes a prime preference for them.
The negative influences brought by multinationals first; Multinational corporations can use their structure to form monopolistic markets. This disadvantage allows each firm to have more flexibility in how they handle the local marketplace with their presence. In this way, then the benefits of scale allow the multinational corporation to price everyone out of the market. This leads to over pricing of products and services, as a resultant of the multinational having dominance on a market product or service.
Due to the size of multinationals, the multinationals have a tendency to run the small market enterprises out of business. For a company to begin making profit, it has to have passed through five years of business establishment. Unfortunately, it is not viable for small business due to rise of multinationals. Bigger companies can produce larger bulk orders, which means they can see a per-unit price savings when compared to start-up businesses. Small businesses end up giving up due to high competition from multinationals.
Multinational corporations can cause harm to the environment. Most developing countries do not have the same level of regulation and oversight that the developed world maintains to protect the environment. When these firms decide to do business in the international market, they are subject to local laws – not the ones that govern their domestic headquarters – when working to obtain raw materials. Smaller, less developed governments often trade an increase in revenues for access to their natural resources. The lower standards create better pricing structures for each customer, but it also creates environmental damage that could have future generations paying the price for today’s decisions. Some nations even trade in recycled materials and trash, which can place even more stress on local resources.
Multinational corporations might provide job opportunities in each local market, but they also funnel out many of the profits back to their centralized office. Some might see this as a return on their infrastructure and educational investments, but it can also be a decision that further weakens an already underperforming government or economy. When you compare how much goes into foreign markets with what comes out of them, the difference is usually minimal and can sometimes be a negative return.
Multinational corporations remove raw materials from the local economy. Although infrastructure benefits do occur when a multinational corporation moves into a developing country, the construction efforts are usually meant to benefit the business and not the local market. Roads and bridges are built to access raw materials, distribute goods, and manage processes more than they are to improve the livelihood of those living in the region. Once all of the goods are removed, then the agency might decide to abandon the project, leaving the government with no way to manage the situation.
Individual influences are virtually impossible to create with multinational corporations.
Because multinational corporations can sometimes be larger than a nation in terms of size and monetary value, these companies have a lot of influence on global trade. Their presence places the average person out of reach from any decision that could impact their local economy. Even homesteading (establishing business in your own country) requires help from these agencies to create a successful experience. Peter Drucker said. “The multinational corporation… puts the economic decision beyond the effective reach of the political process and its decision-makers, national governments.”
Multinationals have a tendency to create a dependency on the business that can be unhealthy for an economy. Because a multinational corporation can control a majority of the decisions that people make thanks to the size and scope of their structure, their presence can create dependencies that are unhealthy for the local marketplace. Consumers might think that they have choices when shopping, but the reality of their situation is that one company is pulling all of the strings of their transaction.
In summary, multinationals have thrived for years. They have not thrived only in their own countries only but through taking their products and services to other countries, allowing room for global consumption. This has not only elevated their names worldwide but has profited them hugely. Some of the benefits of these multinationals have been growth of new invention, for entrepreneurs, growth of business ideas, creation of employment for both the host and multinational corporation. It has created room for creation of partnerships, both country to country and for host companies with upcoming local businesses. Multinationals have also brought about cross culture which has been profitable in diversity of cultures. However multinational corporations also have their negative influence, some of them include taking backing of income generated back to their country. Degradation of the environment as the host country may not have advanced mechanism to cope with inventions from the multinational. It is also unfortunate that some of the infrastructure built by the foreign company is taken down as soon as their term of business has run out. After all is said and done Multinationals are around for a long time, and continue to thrive, with both positive and negative alongside.
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