In this day and age, this world is referred to as globalized due to the fact that humans are now able to get in touch with each other from anywhere around the world.
From all sides of the world be it the Eastern side or the Western side, or from the Northern to the Southern, it is pertinent to note that people all of the information that they require from the principal resource of knowledge. This is the internet.
It enhances profitable activities among individuals who have never known each other previous to their transactions, and some of them even join up together to form or carry out diverse activities regardless of the differences in their nationalities or beliefs.
In this aspect, the matter of multinational companies can be used as the perfect example. This does not indicate that it is easy for them to work together. This is because there are quite a number of challenges that they encounter, which encompass harmonization as well as organizational culture within their operations.
They have to face up to these challenges in order for them to remain competitive and so that they can be able to survive in this world of shrewd business and the environment in which they are to thrive. Companies that do not attempt to adapt to these strategies will find it difficult to operate if the intend to expand their business.
Adoption of the strategic aspects of international business is the key to success in the world of international business and trade.
A multinational company can be defined as a corporate body or rather a venture, which in most instances, has its head offices in one country, which is normally referred to as the home nation, while operating industrial units in various other nations that are normally referred to as the host nations.
The home nation hosts the management team, which ensures that all administrative decisions are made. All decisions may affect their operations in all of the host nations and their operations either directly or indirectly.
There are other names that are normally used to refer to multinational companies in the corporate world. These include international companies, and transnational companies. However, they are more or less the same thing.
This idea of multinational firms is not one that was formulated recently. The idea has been around for very many years and it has a very long history. The notion is believed to date back to the 17th century, when the Dutch East India Company gained fame.
It is thought to be the first multinational company in the world. This business concept or blueprint continues to thrive in the present century. More companies realized the need to diversify their operations in a bid to ensure that they remain competitive and can survive under most strenuous or stringent conditions that affect businesses.
The dawn of the 19th and the 20th centuries saw the rapid increase in embracing the idea by most companies, since the business model was most suitable to the nature of their businesses (Margison 151-180). They realized the advantages of venturing into other regions, and set out to adapt to the model.
There are some differences in the blueprints for multinational companies operations. This means that the bona fide blueprint may be somewhat different from what is actually being implemented by the multinationals today.
It is mostly common to find the operations of a multinational company being headed from one nation, while the other operations are being carried out in other countries. It makes business sense to operate like this since the company can choose to run their operations from nations that may offer them lower production costs.
The rules that govern countries differ and thus, what they encounter in the name of laws or decrees, which they may find rather stringent to their operations, may not be applicable in other nations. It will always make good business sense to head a company from one region.
In this same respect, there are also firms that headquarter their operation from their country of origin due to reasons that favor them, and then seek to run other operations such as production and processing in various nations situated all over the world.
The operations of the auxiliary or arms of the mother company may operate in an independent sort of manner. These two models of multinational company operations are quite different and most of them are successful in their endeavors due to implementation of either of the models stated above.
Another blueprint that is most common among multinational companies and their operations is the setting up of their headquarters in one nation that will control the collaboration that works out to the rest of the nations as well as the industries that are set up in other regions.
In this type of operation, virtually everything is reported back to the main offices and operations are controlled directly from the parent nation. All sorts of decisions that touch ion the operations of the company within the regions must be made from the parent nation.
The system works well and most of the multinationals have adopted it since it offers them a sense of control over their operations and it is easier for them to run their production lines.
They can implement changes that may be construed in the host nation as either being effective or non-effective. The important thing is that it offers them a sense of accountability. Every decision can be traced to the decision maker very easily.
There are quite a number of reasons that may make a multinational firm thrive. The first instance may be that the efficient coordination among the multinational nations is considered better and more improved in comparison to the model, which encompasses independent operations in diverse nations.
The cooperation that is found among multinational firms influences the operations in a positive manner by creating effectual social networks. This influences the operations as well as most other aspects of the firms operations in an optimistic manner.
It improves the outlook of the firm in question. There are several other reasons that make multinational firms to thrive and another is that the subsistence of the multinational firms occurs by deficiencies in the constitutional market for the products that the companies display (Van den Born 111).
There are several examples such as that state that “two firms are considered monopolists in a market and isolated from competition by transportation costs and other tariff and non-tariff barriers. If these costs decrease, the competition will reduce profits.
The firms maximize income and diminish competition by cooperation” (Lavelle 407). This case mostly calls for control of pricing in various nations. The company can very easily enforce price controls in the countries that they deem necessary to do so in this case.
The management can easily determine whether the decisions that they are making will be worthwhile or not. In several other instances such as the one above there are indications that asserted, “Market imperfections are inherent conditions in markets and multinational companies are institutions which try to bypass these imperfections.
The imperfections in markets are natural as the neoclassical assumptions like full knowledge and enforcement don’t exist in real markets” (Green 356). Furthermore, it can be stated that the firms can decrease the amount of money that they spend on raw materials as well as the amount of money that they spend on cheap labor.
This accords the company management the chance to take advantage of the fact that the raw materials are easily available and costs such as the ones that may incurred in terms of logistics are minimal.
Apart from the raw materials, which are also easily available being an encouragement to the firm to operate in the model, the cheap labor also encourages the environment for the firm to operate.
The use of local workers ensures that the amount of money that is spent on the workforce is minimal since they will be paid at local rates.
It may also be important to note that most of the operations of the companies such as their operational expenses are not taxed, and if they are, then the tax that is imposed on them is not as hefty as it is in their parent nation.
This means that they can run their operations efficiently and at low costs in a bid to maximize their profits. Another advantage is that the goods or finished products can easily be availed to the locals for consumption at reduced costs.
In different countries, the amount of taxes may be considered since the firms are protected by the fact that they are creating employment within the regions. This means that they can pull out if conditions that are applied to them become too stringent leaving the populace out of work.
It certainly makes business sense to ensure that the companies are protected, although they ought to ensure that the workers are not exploited or taken advantage of in a negative manner. The rights of humans ought to be put into consideration.
It may also be pertinent to note that the economic strength, as well as enhancement of a nation is dependent on the expansion of multinational firms. The economic growth of a nation, as well as that of multinational firms is directly related. They both move in the same manner and are correlated.
One example is where the growth of a multinational firm can be stunted or stalled by the slowing down of the economic growth of a nation that it is operating within.
Although the firms may operate in different countries, they may have to abide by the rules and regulations of the countries that they have plants in. this is against the backdrop that there may be new strategies that may be engineered in the parent country where the headquarters of the firms may be located.
They may have to tailor their rules to suit that host nations so that their operations may remain stable. It can be stated that multinational firms are unable to operate at their own free will, and they have to adapt to the regions that their plants are located.
They may have to incorporate their own decrees according to the host nations.
This is not necessarily a disadvantage to the firms since the host nations would also not like to lose the revenue and the income as well as the business opportunities and the employment that the firms offer to their country and the people who live there.
In any case, firms that have fully adopted this strategy have seen an increase in their earnings due to the economic upsurge that the favorable business conditions offer them. Good cooperation with the administration of any nation as well as good personal relationships with administrators offers sufficient conditions for any firm to thrive.
The countries that host the international firms can take full advantage of the existence of the firms within their confines.
The fact that the numbers of unemployed individuals is kept at controllable levels in most instances by the employment of the workers in the factories, means that not only is it advantageous to have the firms in their countries.
It also it means that it is one more burden off their backs for the firms to absorb the people who work for them. This augurs well especially for developing nations who endure the most instances of economic turbulence.
It is evident that most nations that host international firms portray a picture that reflects economic growth in terms of their fiscal development. There are several ways that this can be seen such as the development of the infrastructure in the regions that the factories or plants are situated.
Other countries, especially neighboring nations, view these nations as economic hubs in their respective regions, and this works to ensure that they bring along investments into the host nations.
The completion that emanates from these situations is mostly beneficial to the people in the region, seeing as it brings about a wider variety from which they can choose their products from, ensuring that quality prevails.
The attraction of foreign investment brings with it foreign exchange in the region, as well as better cooperation among nations. Trade ties are improved and all countries benefit widely.
This does not imply that there are no negative effects on the host nation. Some situations may be ironical, in that, some people may find gainful employment when international firms bring their operations to a new country.
There are also some situations where at the same time that some people are being employed by the multinationals, others are losing their jobs. The bittersweet reactions that are observed in the reactions and counteractions are assumed to be all in the stride of the multinational companies operational aspects.
Some jobs that have been in existence in the countries that are hosting the international firms may be seen as obsolete once a new firm introduces modern methods of operating. The cultures that were construed into the system of the people may be corrupted by the modern structures implemented by the firms.
They may be wiped away altogether. It is also common knowledge that setting up factories may have detrimental effects on the environment, as well as the natural resources of the hosting country. The use of chemicals and the harvesting of natural resources ensure that the host nation will be affected in various ways.
There are several examples of multinational companies that can be used to elucidate these matters. One such example is Apple Incorporation, which is an American multinational firm involved in the design of various artifacts such as personal computers, electronics, as well as software for computers.
Some of the most renowned products of the firm include Macintosh computers as well as the i-pods and i-pads, as well as the i-phone. The number of people Apple Incorporated has employed has soared to well over 75,000 around the world (Perlmutter 15).
The firm has operations situated in various countries and cities around the world. They include Paris and Tokyo. The headquarters is in Silicon Valley, California.
BMW or Bayerische Motoren Werke AG is another classic example of a multinational firm. The company manufactures vehicles engines as well as motorcycles. There are other brands like the mini, as well as Rolls Royce vehicles that the firm produces.
The firm has its headquarters in Munich, Germany. It has several units situated all over the world including countries like China as well as India and Egypt. The firm also has plants in South Africa Canada as well as the United States and Austria. The units produce different products.
International firms face the challenge of blending diverse cultures, as well as nationalities of their employees the companies ought to take into consideration that they aim to achieve one goal and this means that they have to get their employees to cooperate regardless of their cultural, physical, or religious backgrounds.
Employees from different background and different nationalities can easily raise conflicts among themselves. These conflicts may vary from ideas or ethics to religious aspects. Teaching employees to embrace their colleagues and their cultures as well as ideas, makes them focus on attaining the goals of the firm.
Encouraging the employees to work in harmony and not to overlook or take for granted their colleagues despite their beliefs and cultures will go a long way in alleviating the hurdle associated with attaining the targets of the international firms.
People who act with ambiguity in terms of employee cooperation ought to be kept an eye on by administrators. All forms of racism and discrimination ought to be treated with the utmost of severity. They should not be condoned at all. Eradication of these vices will only see the companies attain profitability.
The comparison of the ultimate target of attaining commercial success, attributed to international firms, is relatively affirmable at present. Many aspects of an international firm are affected when it comes to cooperation among the employees.
In order for the units in diverse regions to realize investment from the parent nations, they must practice valuable cooperation among each other. They will be showcased to clients and the world at large. Profits are realized from efficiency and most businesses realize this aspect.
Nevertheless, leading a powerful international firm encompasses charted work schemes as well as appreciation of diverse nationalities by each employee. Most multinational firms have realized the importance of diversifying their operations and have successfully implemented these strategies in order to maximize their profits.
Works Cited
Green, Duncan. From Poverty to Power: How Active Citizens and Effective States, London, England: Oxfam, 2008. Print.
Lavelle, Jonathan. “Patterning Employee Voice in Multinational Companies”. Human Relations 63.1 (2010): 395-418. Print.
Marginson, Paul. “Employee Representation and Consultative Voice in Multinational Companies Operating in Britain”. British Journal of Industrial Relations 48.1 (2010): 151-180. Print.
Perlmutter, Howard. The Tortuous Evolution of the Multinational Corporation. Columbia Journal of World Business, 30.7 (1969): 9-18. Print.
Van den Born, Floor. Business Communication. Language Policies and Communication in Multinational Companies, 47.2 (2010): 97-118. Print.