Multinational Corporations: Strategies and Impacts
Added on 2020-02-23
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Multinationals 1THE EVOLUTION OF MULTINATIONALS FROM JAPAN AND THE ASIA PACIFIC Student’s NameCourseProfessor’s NameUniversity(City) StateDate
Multinationals 2Rise and Growing Role of Multinationals from the Asia Pacific Region Notably, multinationals are agents of civilization, commercial and industrial advancement inregions such as Asia, Africa and South America .Further the rise of Asia Pacific multinationalshas been linked to boosting commercial relations and ties between Asia Pacific countries and theglobal economy. Noteworthy, multinationals are criticized for favoring home country withregards to economic policies and decisions as compared to foreign home concentration. Throughthe globalization, multinationals are able to enjoy large economies of scale and enjoycompetitive or comparative advantages which would otherwise be not available thus accountingfor the rise and growth of multinationals (Reference for Business 2017).Various Asia Pacificnations have Multinationals regionally and internationally. The rise of many multinationals can be attributed to the fact that there’s ready availability ofraw materials for trade in the Asia pacific regions because it makes it easier and cheaper toengage in production .Also ,the ready market available for the goods and services provided bythe Asia Pacific countries has made the rise and growth of multinationals all the more easy andrampant due to the fact that without a market ,products go to waste and there’s no need forproduction(Gillies 2000) However ,ready market requires a constant or surplus supply of goodsthus making profits for multinationals .Also, some Asian Pacific multinationals have risen andgrown due to the need to exploit raw materials in foreign economies and to explore and penetratenew markets thus accounting for the growing globalization of companies. Additionally, favorable foreign investment initiatives such as low production costs, taxbreaks, subsidies have engineered the rise of multinationals from the Asia Pacific Region toglobal heights (Malik and Aggarwal 2012).Moreover, through a foreign country with lowproduction costs multinationals are able to maintain cost competitiveness which is an advantage
Multinationals 3to companies and businesses. Further, the rise of multinationals have been attributed to the factthat some multinationals possess various advantages over certain environments thus able tothrive in weak environments. Multinationals have strong home concentration and advantagesthus its able to cross borders and service. some multinationals are believed to possessinternationalization capabilities thus the ability to venture into foreign markets . Usually, Multinationals enjoy low labor and production costs in more foreign countriesinclusive of surplus profits which has immensely contributed to the rise and growth ofmultinationals across the globe. The liberalization of home markets by Japanese,Taiwanese ,Korean and Chinese governments has encouraged foreign direct investment. The roleplayed by multinationals in the Asia Pacific region can’t be ignored in the sense that through therise and growth of multinationals, employment opportunities have been created both in home andforeign economies, revenues for both governments have been boosted hence contribution to highgross domestic product for both home and foreign countries (Research matic 2017).Tradeliberalization, economic growth are some of the significant role played by various multinationals. Through foreign direct investments, multinationals are able to boost economic growthlevels of the host country through its addition to the investments index of the foreign country..Role of growing Multinationals According to the International LABOR Organization, multinationals distributecapital ,employment opportunities and technology through their operations thus benefiting boththeir home countries and host countries. Through the activities, multinationals transfertechnological knowledge and expertise between the two countries ,create employmentopportunities in both host and home countries and transfer management strategies from home
Multinationals 4countries to host countries(Soni 2012).Further ,there increase in the trade volume of the hostcountry in the event of multinationals setting up. Through the entry of multinationals ,some hostcountry monopolies might be broken due to entry of new players thus increasing consumerchoice, variety and sovereignty. With the recent technological advancement, host countries areable to enjoy research and development outcomes emanating from the operations ofmultinationals . In addition, through multinationals, host countries are likely to reduce the volume of importsand export more thus boosting its revenue from exportation of goods within its economy.Following the growth of multinationals, economic growth and development is likely to increasedue to the stimulated demand for goods and services through the foreign direct investment bymultinationals. Due to investment levels going up, more employment opportunities will becreated in the host county, the availability of competitiveness will influence consumer choicethus leading to profits being made. In addition, the growth of multinationals in host countries hasexpanded due to the flexibility of rules and regulations on foreign investments and theavailability of financial incentives such as low labor costs, low taxation brackets and tax breakshave immensely boosted the growth and rise of multinationals. Also, multinationals have promoted research and development in developing countries. Most multinationals venture into less developed countries due to the competitive advantages of their home countries thus they are able to maximize profits and penetrate new markets through foreigninvestment .China
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