Dramatic effect of Globalisation and the rise of the Multinational Corporation (MNC)

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What is the relationship between globalisation and MNCs?

A global network of communication and trade has allowed regional economies, communities, and cultures to converge over time. This trend is known as globalization. An organization that conducts business in two or more nations is known as a multinational corporation (MNC). The same applies to transnational corporations

The rise of MNCs and the ever-growing importance of international trade have intensified globalisation. Businesses may strive to become an MNC for several reasons, including the following:

Businesses can develop abroad and enhance their sales turnover by having a larger consumer base. To take advantage of the enormous client base, several companies, including HSBC, KFC, Starbucks, Lamborghini, and Walmart, have ventured into China. Using global marketing techniques can also improve brand recognition internationally.


Many MNCs expand internationally to take advantage of lower production costs, particularly low-cost labor. For instance, because of the comparatively high cost of labor in Germany, which is partially attributable to the adoption of minimum wage laws, companies like Adidas, BMW, and Volkswagen have production plants abroad that employ less expensive labor.


The benefits of EoS are available to MNCs when production volumes rise. MNCs could choose to set up shop abroad in order to take advantage of the host nation's transportation, telecommunication, and port networks. In terms of available area and/or land prices, the host nation may provide a greater variety and quality of land. The government of the host nation may also offer financial incentives that lower manufacturing costs and permit MNC expansion.


MNCs can typically escape any protectionist policies that the country may implement by producing there. This is the reason why many Japanese automakers, such as Toyota, Honda, and Nissan, operate factories in the United States and the European Union.


Risks can be distributed by MNCs. If a corporation can distribute risks internationally, unfavorable market circumstances in one nation or region may not have a negative impact on the total operation. Different parts of the world have been impacted by terrorism like 9/11, swine flu, and diseases like mad cow disease and tsunamis. Any one of these areas may have seen a significant decline in profits for these companies due to overspecialization.




Reference


  • Dunning, J. H. (2000). The eclectic paradigm as an envelope for economic and business theories of MNE activity. International Business Review, 9(2), 163-190.

  • Gorg, H., & Strobl, E. (2008). Multinational Companies and Productivity Spillovers: A Meta-Analysis. The Economic Journal. Available from https://doi.org/10.1111/1468-0297.00669

  • Rugman, A. M., & Verbeke, A. (2004). A perspective on regional and global strategies of multinational enterprises. Journal of International Business Studies, 35(1), 3-18.

  • Srivastav, V. (2023). 8 Differences Between working for MNC Vs Startup. [Blog entry] 12 March. Available from https://www.myrealdata.in/blog/working-in-mnc-vs-startup/ [Accessed 20 April 2023].


Comments

  1. Udeshika WanninayakeApril 22, 2023 at 3:46 AM

    Good work Sanjeewa. How has the global network of communication and trade facilitated the convergence of regional economies, communities, and cultures over time, leading to the trend of globalization?

    ReplyDelete
    Replies
    1. SanjeewaApril 23, 2023 at 7:21 AM

      Thanks, Udeshika. for your comment

      Delete
    2. SanjeewaApril 23, 2023 at 7:21 AM

      The global network of communication and trade has played a significant role in facilitating the convergence of regional economies, communities, and cultures over time, ultimately leading to the trend of globalization.

      Delete
    3. SanjeewaApril 23, 2023 at 7:25 AM

      The growth of global trade and investment has created complex global value chains, where different stages of production are spread across different regions. This has led to economic interdependence, where regions specialize in producing what they are most efficient at and trade with others for goods and services they lack. This has led to the convergence of regional economies, as countries become more reliant on each other for economic growth and prosperity.

      Delete
  2. Bimali HerathApril 23, 2023 at 7:37 AM

    Great article.Can you explain What are some reasons why businesses strive to become multinational corporations (MNCs) and how does globalization contribute to the rise of MNCs?

    ReplyDelete
    Replies
    1. SanjeewaApril 23, 2023 at 7:40 AM

      Thanks for your comment Bimali.

      Delete
    2. SanjeewaApril 23, 2023 at 7:42 AM

      MNCs expand internationally to tap into larger consumer markets and increase their sales turnover. Globalization has facilitated a global network of communication and trade, allowing MNCs to access consumers in different regions and countries.

      Delete
    3. SanjeewaApril 23, 2023 at 7:45 AM

      Globalization has facilitated the rise of MNCs by providing opportunities to access larger markets, lower production costs, achieve economies of scale, escape protectionist policies, and diversify risks, among other factors.

      Delete
  3. Lakmali HapangamaApril 24, 2023 at 1:02 AM

    Organizational change management, on the other hand, involves the process of planning, implementing, and managing changes in an organization to minimize resistance, ensure successful adoption, and achieve desired outcomes.

    ReplyDelete
    Replies
    1. SanjeewaApril 24, 2023 at 3:51 AM

      I appreciate your thoughtful feedback.

      Delete
    2. SanjeewaApril 24, 2023 at 3:54 AM

      Organizational change management refers to the strategic process of planning, executing, and overseeing changes within an organization in order to effectively transition from current practices to desired outcomes. It involves various activities aimed at minimizing resistance, fostering acceptance, and ensuring successful adoption of changes across the organization.

      Delete
  4. W.WarusapperumaApril 24, 2023 at 7:26 AM

    Development of regional economy with multinational cooperation is becoming a vital force to the local organization. your article prove the impotency of the same

    ReplyDelete
    Replies
    1. SanjeewaApril 24, 2023 at 9:18 AM

      Thanks Wasantha,

      Delete
    2. SanjeewaApril 24, 2023 at 9:25 PM

      MNCs can contribute to the economic growth and development of local regions by investing in new facilities, creating jobs, and generating revenue through their operations. This can stimulate economic activity, increase tax revenues, and contribute to the overall development of local economies.

      Delete
  5. Kusala JayaminiApril 24, 2023 at 9:26 AM

    Interesting article !

    ReplyDelete
    Replies
    1. SanjeewaApril 24, 2023 at 9:27 PM

      Thank you! I'm glad you found the information interesting. If you have any further questions or need more information on the topic of globalization and multinational corporations, feel free to ask! I'm here to help.

      Delete
  6. AnonymousApril 26, 2023 at 9:33 AM

    What are some of the dramatic effects of globalization and the rise of multinational corporations on the world economy, society, and culture?

    ReplyDelete
    Replies
    1. SanjeewaApril 26, 2023 at 8:41 PM

      I appreciate you asking this.

      Delete
    2. SanjeewaApril 26, 2023 at 8:52 PM

      The rise of multinational corporations has led to increased economic integration between countries. Multinational corporations invest in foreign countries, transfer technology and know-how, and create jobs, leading to economic growth and development.

      Delete
    3. SanjeewaApril 26, 2023 at 8:56 PM

      Globalization has led to the spread of Western culture around the world. Multinational corporations promote Western values and products, leading to the homogenization of cultures and the loss of cultural diversity.

      Delete
  7. AnonymousApril 30, 2023 at 8:01 AM

    Great post, Mr.Sanjeewa. Thank you for shareing valuable information.

    ReplyDelete
    Replies
    1. SanjeewaApril 30, 2023 at 10:54 PM

      Thank you! Please feel free to inquire if you have any other questions or require any additional information on the subject of globalization and multinational firms. I am here to assist.

      Delete
  8. Ayomi RajapakshaMay 1, 2023 at 6:22 PM

    Great post. Their brand is known worldwide by using techniques in manufacturing and selling at competitive price with low labor turnover while maintaining the quality product. How to apply this to our products???. How should market research be done??

    ReplyDelete
    Replies
    1. SanjeewaMay 2, 2023 at 8:23 AM

      Thank you for your interest and query, Mis. Ayomi

      Delete
    2. SanjeewaMay 2, 2023 at 8:24 AM

      To apply the strategies used by MNCs to our own products, we need to conduct market research to understand your target market and identify opportunities for growth. Here are some steps you can take,

      Delete

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