Globalisation: Opportunities and Challenges for Multinational Corporations

This article discusses the opportunities and challenges of globalisation for multinational corporations. It explores the role of MNCs in driving economic growth and development, as well as the ethical and legal issues they face. The article argues that MNCs should act on these opportunities and challenges to leverage the benefits of globalisation.

Globalisation

Table of Contents
INTRODUCTION...........................................................................................................................1
PERSPECTIVE FOR.......................................................................................................................1
PERSPECTIVE AGAINST.............................................................................................................4
CONCLUSIONS..............................................................................................................................5
REFERENCES................................................................................................................................7

Research Question: Globalisation has significantly increased since 1970 (UNCTAD, 2014) and
is seen as a fundamental factor for business and economic growth. However, there are concerns
regarding the continued growth of globalisation and the future challenges and opportunities it
brings. Is this an issue that multi-national corporations should be acting on? Formulate your
critical argument for or against.
INTRODUCTION
Over the course of time, there has been a rise in the notion of globalisation. This is seen
as a major factor that lays down the foundation for economic as well as business growth and
development. MNCs are playing a vital role in process of globalization (Yadav, 2020). The
research question revolves around the fact the globalisation does give rise to certain
opportunities and challenges which may or may not to be taken into consideration and be acted
upon by the multinational companies. This is of interest because lately globalisation has caused
extensive debate between the scholars and researchers. In accordance with my views and
opinion, my perspective is in favour that the multinational companies must act upon the
opportunities as well as issues brought in by the concept of globalisation. This position is taken
as multinational corporations by taking this issue into consideration can leverage the
opportunities to counter the challenges in an effectual manner. I think it is correct because
multinationals drive the growth of countries and thus if their negatives can be controlled then
more of development and prosperity can be ensured for the economies whereby they tend to
operate.
PERSPECTIVE FOR
Globalisation is a wide concept underpinning the integration of people, governments,
countries, economies in order to give an overall boost to the global growth and development.
With the constant rise in globalisation, multinational corporations are faced with opportunities
and challenges. Globalisation enables the multinationals to carry out Foreign Direct Investment
(FDI), thereby gaining access to a new country. This boosts the overall growth and development
of national economies across the globe (Perlas, 2019). Further, it is seen that globalisation in the
long run allows free flow of goods and services from one country, imply trading in an effectual
manner. Along with this, it is acknowledged that globalisation makes the countries undergo cross
cultural management as the culture of the home country and the host country are in most of the
1

cases different. Additionally, it is also renowned that majority of companies today seek to carry
out global expansion in a bid to develop greater scale and efficiencies, enables increment in base
of customers, access talent in foreign markets, diversify the portfolio, foster merger and
acquisition, avoid trade barriers and facilitate free flow of goods and services across the
international boundaries (2020 State of Global Expansion™ Tech Industry, 2020).
Figure 1: Reasons why business look to new markets
There are certain challenges also that arise as a result of the pervasive concept of
globalisation. The most prominent issue in this regard is acknowledged to be workplace
discrimination (Ietto-Gillies, 2019). Due to the differences underlying in the cultures of
employees in domestic and host country, personnel within the international market are posed to
the risk of facing stereotypical and discriminative behavioural conduct from fellow employees
2

and even the top management. This is an ethical and legal issue that takes birth when
globalisation occurs on a wide scale (Vázquez‐Barquero and Rodríguez‐Cohard, 2019). Another
significant issue that takes place is that a large number of multinational corporations get involved
in evasion or avoidance of taxation by transferring the income earned in international markets to
domestic market and thereby reflecting the source to be the home country. It is one of the most
common ways through which the tax liability in international markets can be avoided, reduced or
invaded. Yet another challenge associated with the phenomenon of globalisation is recognised to
be the excessive investment that is required to be done by the companies in order to create
awareness within the bounds of global markets. Other kinds of issue include recruiting in
international markets, incurring tariffs and export fees, management of employee immigrations,
different payroll procedures, and communication with client in a long distance context, absence
of governmental aid, finding expert consultants, adhering to the stringent foreign rules and
regulations and so on (Dwyer and Čavlek, 2019).
It becomes extremely important for multinational organisation to act upon the challenges
and opportunities arising as a consequence of globalisation (Epstein, 2019). This is important in
order to make sure that the opportunities associated with globalisation are effectively tapped and
the challenges are countered in a timely manner. It is also significant that these are taken into
account by the multinational organisations so that they can succeed in providing a boost to the
overall growth and development of the national economies whereby these companies seek to
operate.
According to me, it is significant for multinationals to do so. I will explain this using an
example. For instance – A company is carrying out expansion into a foreign market and does not
take into account the opportunities and threats of that market. There are several activities which
are banned in different parts of the world like sale of gum within Singapore, celebration of
Valentine's Day within Indonesia and Pakistan, having ketchup within France, using someone
else's wifi, samosas within Somalia and responding to work mails on weekend in some nations.
When a multinational corporation enters any such country and ignores the threats in terms of the
activities which are banned or not likely to be conducted in that nation, then the organisation is
likely to get indulged in illegal or unethical activity as per the government and people of that
market. This will create legal and other kinds of repercussions for the company. To avoid such
3

situations, I believe it is important for corporations to duly consider the positives and negatives
of globalisation while carrying out expansion on a global scale.
There are several international business models with the help of which an entity can
leverage globalisation and gain entry into a new market to expand its sales and profitability. In
this regard, it is determined that a key international business model is franchising. Hereby the
company hands over the responsibility of carrying out operations under its name to a third party
with the faith that the third party will not get indulged in an activity that can cause bad name to
the brand. However, contrary to this, many times, it is seen that franchisee makes use of the
name of a renowned multinational corporation and exhibit dishonest or disloyal behaviour. This
tends to emphasize over the need for multinationals to take into account the opportunities and
threats linked to the phenomenon of globalisation or in other words, the global expansion
(Perraton, 2019). When the companies give regards to such opportunities and issues, it gives
them the scope to undertake a course of action which can prevent the business from undergoing
adversities and ensuring the execution of business operations in foreign markets as per the
requirements and expectations of the company.
PERSPECTIVE AGAINST
MNCs lead to enhance accessibility of product anywhere in world. The main role of
MNCs is not only to sell their product across worldwide but also to provide the good and
services to population of other country so that they can generate employment in different
countries which helps to increase the growth of any country. International expansion has over the
course of time become sort of necessity for growing businesses and multinational corporations
are they are faced with extensive competitive pressure. The companies seek to gain entry into
new foreign markets in order to achieve growth and development, thereby giving an overall
boost to the financial forefront of the organisations (Sutcliffe and Glyn, 2019). This provided
them with a chance to enhance their existent customer base and market share across the globe.
There are several reasons why multinational corporations should not act upon the
opportunities and challenges presented by the phenomenon of globalisation. One of the key
reasons in this regard is acknowledged to be the overall benefit that the multinationals receive as
a result of carrying out the global expansion (Michie, 2019). Carrying out expansion in a number
of countries across the globe enables the companies to inflate the existence base of customers,
facilitate increment in revenues and profits, gain access to skilled and talented individuals in
4

foreign markets etc. Thus, the concern about opportunities and issue should be ignored by the
multinationals as their prime concern is just to maximise their financial performance which
anyways gets a boost when they operate in a number of nations by conducting global expansion
on a wide level. I will explain this with the assistance of an example. For instance – A
multinational corporation dealing in bakery items is expanding into UAE. The entry into foreign
market will automatically widen the exposure of the organisational offerings within the market
place, pulling the attention of people in an effectual manner. Hereby, had the firm identified the
market opportunity of excessive health consciousness of people, it could have come up with
healthy bakery items such as gluten free or sugar free range and earned higher revenues.
However, even when the entity did not take into account the opportunity, the entity has still
increased its profits through facilitation of expansion into the confines of UAE.
Companies may choose to carry out global expansion physically or via online channels.
In context of the latter, it is recognised that the most prominent international business model
which is used by multinationals is e-commerce. This is one of the ways through which an entity
by way of online mode of business carries out sale of its products and services in an effective
manner. This mainly takes place via web pages or mobile applications but provide assistance to
the companies to gain access to a large base of audience in several countries across the globe
(Ullah and et. al., 2019). Thus, e-commerce is said to an effective way by way of which a
multinational corporation can globally expand. An entity does not need to take into account the
opportunities and threats linked to globalisation but only focus upon its prime objective of
fulfilling its objective of maximising the revenues and profits of the organisation in the long run
of time.
CONCLUSIONS
On the basis of above debate, it can be said that globalisation has driven the growth of
economies by allowing the multinational corporations to tap entry into countries whereby they
intend to find market opportunities. In addition to this, multinationals stipulate employment
opportunities, giving a chance to local people to enhance their standards of living. Also,
multinationals enables the technological advancement of countries as a whole with these
organisations investing in the latest and emergent technological trends in order to attain a
strategic and competitive edge in market place. Furthermore, it is seen that globalisation also
give rise to cultural diversity. This happens when multinational corporations gain entry into a
5

number of nations consisting of people pertinent to different national and cultural contexts.
However, it is also seen that globalisation leads to issues like tax avoidance or tax evasion,
workplace discrimination, stereotypes etc. It is important for multinationals to take into account
these challenges and opportunities in order to leverage the latter to counter the former.
The different sources used for this research have provided assistance in duly answering
the research question by providing the researcher with credible, relevant and reliable information
pertaining to the subject matter of the concerned study. The overall agreed point over the
response to research question is that multinational corporations need to act on the issue related to
opportunities and challenges arising as a result of globalisation. The research into this issue
should be further conducted in order to gain more credible and relevant information about the
subject matter. Also, the further examination will allow the researcher to gain detailed
knowledge of the respected topic, thereby enabling the investigation to carry out personal and
professional development.
6

REFERENCES
Books and Journals
Yadav, S.B., 2020. Opportunities and challenges. Shifting Transnational Bonding in Indian
Diaspora.
Perlas, N., 2019. Shaping globalization. Temple Lodge Publishing.
Vázquez‐Barquero, A. and Rodríguez‐Cohard, J.C., 2019. Local development in a global world:
Challenges and opportunities. Regional Science Policy & Practice, 11(6), pp.885-897.
Ullah, S. and et. al., 2019. Globalisation, governance, accountability and the natural resource
‘curse’: Implications for socio-economic growth of oil-rich developing countries.
Michie, J. ed., 2019. The handbook of globalisation. Edward Elgar Publishing.
Sutcliffe, B. and Glyn, A., 2019. Measures of globalisation and their misinterpretation. In The
Handbook of Globalisation, Third Edition. Edward Elgar Publishing.
Perraton, J., 2019. The scope and implications of globalisation. In The Handbook of
Globalisation, Third Edition. Edward Elgar Publishing.
Epstein, G., 2019. The role and control of multinational corporations in the world economy.
In The Handbook of Globalisation, Third Edition. Edward Elgar Publishing.
Dwyer, L. and Čavlek, N., 2019. Economic globalisation and tourism. In Handbook of
Globalisation and Tourism. Edward Elgar Publishing.
Ietto-Gillies, G., 2019. The role of transnational corporations in the globalisation process. In The
Handbook of Globalisation, Third Edition. Edward Elgar Publishing.
Online
2020 State of Global Expansion™ Tech Industry. 2020. [Online]. Available Through:
<https://stateofglobalexpansion.com/>.
7