Global Communication: UK and Italy Multinational Companies Impact

This essay delves into the impact of multinational corporations (MNCs) on the economies of the United Kingdom and Italy, focusing on the food sector with examples of companies like McDonald's and KFC. It explores the benefits MNCs bring, such as increased investment, employment, and tax revenue, while also examining challenges related to adapting to local markets and economic conditions. The essay analyzes the economic growth of these companies in both countries, highlighting the successes and difficulties faced, including adapting to local preferences and political climates. It discusses how companies like McDonald's have navigated cultural differences and market trends to establish a strong presence, while also addressing the broader implications of globalization and competition in the global market. The essay also explores the challenges of inflation, labor costs, and government policies that affect multinational operations and overall market expansion.

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Global Communication
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The multinational corporations provide many benefits to their host countries and
mainly it benefits the developing countries. However, along with providing the benefits, the
institutions have also provided certain types of relaxed codes that are related to the ethical
conduct that is meant to provide the backbone of a critical support system that is necessary
for the all over the social and economic development of the country. The scale of investment
done by a multinational company is quite significant for the host country where they establish
their company. The multinational company, when established in the host country, helps to
improve and increase the share in the balance of payments scenario in the host country. The
investment of the multinational company in the host country takes place in the form of the
direct flow of capital in the host country. The multinational companies along with enhancing
the country’s capital also help in boosting up the employment ratio of the host country.
Especially in developing countries, the youth of the region get the chance to enhance their
economic situation. The FDI generated also results in various employment benefits for the
host country where they have established their companies. The host country also gets an
opportunity to enhance their tax revenue, as the multinational companies become a source of
the collection of the local taxes. The development of the multinational companies also
increases the technical know-how and the enhancement of the interactions that take place
among the various diverse communities. The multinational corporations also result in a rise in
the profit share in the economy of the country. The company has also raised the employment
rate in the country where it sets up the company to enhance production. The multinational
corporations also have a good effect on the globalization process in the host country as it sets
global standards for all the customers present in the host country. It has a good effort in
bringing smooth interaction among all the different communities that exist in the world. It
tries to bridge the gap among the different communities and the difference that exist between
them (Kotabe and Kothari 2016).

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There have been emerging trends of multinational companies in all the, but the most
prominent development has been observed in the food sector. Companies like KFC and
McDonalds have been the most vibrant examples in the field of multinational companies
working in the food sector. In this essay, we will mainly study the impact of the multinational
companies on the two most globally developed countries of the world, the united kingdom,
and Italy. The companies like McDonalds and KFC have made immense shares of profits in
these countries since it has established its business over these regions. Although the UK
multinationals include many big companies with their full extent of broad economic impacts
on the country, McDonald's seeks to provide an even better future by assessing the various
contributions of the different MNCs in the context of the key matrixes of the different
economic services offered. However, irrespective of the phenomenal growth by the
multinational companies in the US, the percentage share of the multinationals on the
economic growth of the UK is just one percent of all the other companies operating here. The
director of the MGI, James Manyika discussed the oversized contribution that the
multinational corporations have made on the UK’s economy. The multinational companies
operating in the UK have recorded a distinct economic growth in all the sectors and among
all the sectors of the business cycles. The companies participate disproportionately in all the
global level competitive sectors mainly the manufacturing sector which was severely hit
during the recession that occurred in the year 2001. The multinational companies in this
situation the companies have played a critical role in triggering the expansions that were just
followed after the past recessions. However, in this context, various UK companies have to
confront some critical pressures and choices where the UK multinational may provide some
important insights into the process of how the other companies will be responding to the
intense form in the rise of the global level of competition. In recent years, UK is providing
the highest market share for the multinational companies to flourish in the region, however,

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the researchers of the MGM observed that the factors that result in the effective business
framework that is responsible for determining the appropriate responses to the various
policies. To gain more insights, the researchers of MGI interviewed several senior-level
executives to examine the appropriate business decisions that have to be taken for the smooth
functioning of the company. The results of the interview are that several executives have
expressed serious concerns regarding the ability of the nation to compete or adapt to the latest
corporate investment process and the availability of jobs for the future. The nations also have
a new source of earning the local tax on multinational corporations. The countries like the
UK have already offered a huge market share for the multinational sectors that have worked
in the food sector, and are constantly expanding their market base to reach out to all the
people (Görg and Stroble 2016).
However, the growing concern of the multinational companies in recent times is the
fact that they are facing a shift from the domestic factors and the local factors that influence
their food habits and the preferences of diet. The leading multinational companies have been
functioning with a global perspective of marketing, which is often ignoring the local interests
of the local group of people. The main challenges faced by multinational companies in
countries like the UK can be referred to as the economic challenges that affect the market
trends and affects the buying pattern of the consumers. Because many economies do not
function well and they try to rise from the rising wave of inflation, the rate of consumer
spending still functions at a lower level. Because of this inflationary situation, the
multinational companies fail to function properly become unable to generate profits. Such
type of losses has resulted in the companies to adopt certain drastic measures like those that
tools of job cuts, to keep them stay afloat. The emerging multinationals there has been an
increase in the problem of the labor costs in many host countries where the companies are
established. When the cost of labor becomes high, it pushes the overall operational costs at a

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higher level, which eventually decreases the profit margins. There are several forms of
multinational corporations that have set some sorts of key operating units like the
manufacturing units in the countries abroad, which are far away from their headquarters to
avoid the problem of the inflated form of the labor costs. In countries like the UK, it is not
always easy and practically feasible to maintain a form of efficient operations and a reliable
form of the supply chain because of the processes that it requires. To achieve the form of
efficient operations, the companies will require creating an effective mechanism of
production and a sound distribution mechanism that can handle and manage the global
audience that is often at times very expensive. This refers to the fact that the multinationals
when they target for a broad market that will come up with the different processes of
distribution levels to meet the different shifting demands of the customers. Since the
multinationals always seek to operate in various countries, there is usually a rising
disagreement on the different needs of the business, the demands of the government and that
of the public. The most important factor that challenges the rise of multinational companies
market in countries like the UK is the fact that they fail to adapt themselves with the
changing and the ever dynamic political situation of that country u that situation. The
political atmospheres of the countries differ from another in their structural framework. As a
result, the countries face various types of political instability and at times ravaged by wars
and conflicts and suffer from poor economic standings. Because of the frequency of the
various types of threats and risks presented in these types of economies, the multinationals
are often seen shying away from entering into the new markets. This restricts the market
expansion in the developing countries (Beugelsdijk and Jindra 2018).
As in the US, multinational companies have also seen flourishing growth in terms of their
production in Italy. It was first in the mid-1980s when Mc Donald’s has opened its first outlet
in the city of Rome. In the initial years of its establishment, it has seen phenomenal progress

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in its market share. The McDonald while operating in Italy to increase its market share has
brought its competitor in the market too. The deal cracked was such, which highlighted the
fact that Mc Donald’s will take over all the restaurants that operate under Burghy and in
exchange, they will receive the Cremonini products as the sole meat supplier for the Mc
Donalds restaurant operating in Italy. In this manner, both sides of the business deal earned
equal profits. Within a very short period, the Company of Golden Arches replaced the
company of Burghy logo and it was just left to the safety standards of McDonald's to provide
a sufficient deal of satisfaction to the new customers who are not habituated in eating burgers
and fries. To expand the market in Italy was not easy, because it also included convincing the
older generations living over here. To win over these limitations, Mc Donalds introduced the
system of supplying healthier foods like introducing items of salad and different bars of
pasta. This concept became the catchword of the company and entered into the domain of the
Italian style of foods. A further rise in the share of the market occurred through the
formulated business agreement with the Italian oil giant companies. This agreement further
increased the market share by opening a few more new restaurants in Agip gas stations of
Italy. The final step that was taken by the company in Italy was the introduction of the
franchising facility that shows a shifting trend from a more corporate form of environment.
Franchising in this sector has resulted in the private citizens and the other small business
firms to invest more and spread more to the chain. The number of Mc Donalds Company that
currently operates in Italy in recent times. The other allied companies have also tried to
remain at a marginal success rate in Italy. The success of the company of McDonald's in Italy
proved that despite the various political and social adversity scenarios. Italians in all through
these years since its establishment has embraced the functioning of the company. What
strikes the most in this context is how Italy has managed to be dominated by the company of
the Golden Arches, which is now seen in the context of the gleaming next to the historical

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landmarks like the Pantheon. As of 2015 in June, 560 outlets of McDonald's restaurants
continue to thrive in Italy (Hoenen and Kostova 2015).
However, although McDonald's has recently recorded high growth in its production in Italy
still it is not free from certain challenges and limitations. The most important challenge of the
company since its very inception was the fact that the Italians by habit are not so fond of food
items like the food burgers and other such snacks. The second challenge that the company
faced on behalf of its operation in Italy, was the difficulty that the company faced in adopting
the various techniques to communicate locally and base its production based on the local
preferences. Initially, it became very difficult for the company to manage its production
based on the tastes and preferences of the local people. Another problem is that to broaden
and extend its market base, several distribution processes were hampered which also
restricted the profit share of the company largely. The main reasons for Italy's economic
limitations are caused by the existing situation of the economic crisis scenario and stem out
from the loss like competitiveness present in the Italian industry. Because of these
difficulties, it became difficult for a developing country. However, the Italian economy
expects a strong acceleration in the upcoming years. Italy’s economy is now on the way of
evolving out from the recession phase. The challenge of communication is also restricting the
market share of McDonald's in Italy. Companies like McDonald's mainly function in the
western-like atmosphere and the Italians mainly prefer their indigenous language of
communication. Apart from the situational and the communicational challenges, the other
problems faced by the company are the complex form of the bureaucratic and regulations
system that prevails in the country. Sometimes various governmental policies restrict the
proper functioning of the company in the country. Italy is also identified as having a slow
form of the judicial system that delays the judicial procedure of the country. There also

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prevails a form of unfair competition type that prevails in the Italian market, due to cases like
that of bribery, tax evasion and corruption cases (Brewster 2017).
The study finally brings us to the fact that multinational companies have seen recent success
rates in countries like the US and Italy. However, the growth of these companies in the
countries has recently resulted in the shift from the traditional system of production or the
system of addressing the local communities. The emerging companies have a more global
overview of their production process. The western-like approach has also led to a reduction in
local factors in the global production process. The study also concludes the fact the
enhancing of the profit shares by the company is compromised by the reducing influence of
the local elements on the production process. The process of globalization has triggered the
factor of multinational companies to a great extent and resulted in bringing the global
communities together by bridging their gaps.

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References
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Handbook of Cross‐Cultural Management, pp.126-141.
Hoenen, A.K., and Kostova, T., 2015. Utilizing the broader agency perspective for studying
headquarters–subsidiary relations in multinational companies. Journal of International
Business Studies, 46(1), pp.104-113.
Beugelsdijk, S. and Jindra, B., 2018. Product innovation and decision-making autonomy in
subsidiaries of multinational companies. Journal of World Business, 53(4), pp.529-539.
Görg, H. and Strobl, E., 2016. Multinational Companies, Technology Spillovers, and Plant
Survival. In Multinational Enterprises and Host Country Development (pp. 289-303).
Kotabe, M. and Kothari, T., 2016. Emerging market multinational companies’ evolutionary
paths to building a competitive advantage from emerging markets to developed countries.
Journal of World Business, 51(5), pp.729-743.