How multinationals have altered the business environment
It’s no secret that the combined efforts of each and every huge multinational corporation have put millions of people within the United States of America out of work and/or deep financial difficulty.
Some say that those owners and those controllers of those huge multinational oil companies have conspired to destroy the economy of the United States of America by causing the price of crude oil to now exceed $135.00 per barrel. That’s more than a 400% price increase and yet our elected do-nothing politicians for the majority of «We People of the United States of America» have failed to take action against such economic extortion. Another term for such behavior is «price gouging.»
You see, since President Bush is well connected with the people who own and/or control those oil companies don’t expect any of those oil people to be arrested and tried for treason. As a matter of fact, it’s the assets of those oil companies that the people within our military are now protecting, in the guise of fighting Arab Terrorists.
Each and every multinational corporation seems to have the support of our elected politicians while tens of thousands of Citizens of the United States of America continue to lose their jobs to Foreigners within Foreign Countries. They are closing their U.S. factories just as fast as they can build new factories within those Foreign Countries, while, at the same time, continue to suck the wealth out of every person on Earth.
It is quite a simple matter to simply revoke the right for each and every multinational corporation to do business within the United States of America, and allow those Loyal Citizens of the United States of America to make the products that are currently provided by each and every multinational corporation.
Trade agreements or not, it is quite simple to reject each and every cargo container that is shipped from a Foreign Country, most of which that now enters our Country aren’t even inspected for illegal drugs or otherwise harmful items that have killed many of our own people.
It is true that within any Democracy, if the desires of the many are ignored in favor of the desires of the few, bad things happen to the many. You now see the effects of our elected politicians’ support for those huge multinational corporations. The rate of inflation is now rising higher than a kite in a hurricane. A record number of people are losing their homes. Domestic business failures continue to increase. Consumer debt continues to rise. The number of homeless
Multinationals have made a tremendous impact on other businesses not matching up with them in every aspects of a business. Some may have gone out of business , some may still be struggling , and many would not dare start a business to directly compete with the multinationals. They are able to make an impact for their strengths in every aspects of a business .
Multinationals are mostly listed companies who have the ability to raise money from the public via the stock exchanges. Funds raised from the exchanges will be used to support their business operations . Other business have to rely on their own finance or borrow from banks at slightly higher interest rate than the multinationals.
Multinationals have expertise as they employ professional managers who are good at soft skills as well as technical skills. Often other businesses are pretty stretched on both soft skills and technical skills .
Multinationals are in a stronger position to take on contracts of substantial amount . They have not only the financial muscles to see the contract through but also the technical expertise to complete the contract . Other businesses have no financial and technical capabilities to take on large contracts.
Multinationals have global presence to serve their customers where they are. For example , most multinationals have offices , manufacturing facilities in China , India where they sell their products to the extremely large consumers . Operating in the customers countries would mean lower costs which translate into competitive edge. Other businesses have to rely on costly export to China , India if they want to tape the consumers in these countries .
Multinationals have the bargaining powers to bargain for anything from cheaper financing because of their credentials , cheaper bulk purchase of raw materials etc . Collectively they can even lobby for favorable business concessions from the governments. Well other businesses have no such bargaining powers.
There is no much other businesses can do to compete directly with the multinationals .They should remain small in their own way and serve a niche market. However, they have a choice, like most other businesses have done ,to become the supporting businesses to the multinationals.
How has the emergence and proliferation of multinational corporations changed the business landscape? The overarching answer to this question is found in the free trade regimes that have arisen in the last several decades, and the concomitant increases in foreign investment that were also pushed along by technological advances that allowed companies to more easily control workforces in distant regions and ship goods over long distances cheaply. By compiling statistics from the United Nations’ «World Investment Directory» it is easy to see that while foreign investment between more-developed countries has been relatively high for a long time, the percent of the total economy of less developed countries that is made up by foreign has increased precipitously from four percent of Gross Domestic Product (GDP) in 1980 to approximately 28 percent of GDP in the year 2000.
But what does this mean for business? The major effect has been increased competition for domestic businesses in the more-developed countries (not to mention the social and economic distortions caused in less-developed countries). This has lead to many companies going out of business and has even lead entire regional industries into trivial levels of importance (e.g., the textile industry in North Carolina). But the real question here is, what can be done about this situation? The answer lies not in protectionism, but neither does it lie in unbridled ‘free markets.’ Karl Polanyi in his book «The Great Transformation» noted that there never has been such a thing as an entirely free market, and the coming of a free market would run so rampant over a population that it simply would not last. The answer, in my opinion, is well planned and efficient regulation of markets and trade relations to maximize benefits for people and businesses in both the more- and less-developed countries.
Moving in the direction of efficient and fair regulation on all businesses can be promoted from several different directions. What is needed foremost is a cross-national agreement on labor and environmental standards, this would to some extent level the playing field for domestic and multinational capital while at the same time decreasing many of the distortions that foreign capital may be creating in some areas. We must also understand that many less-developed countries are not able to enforce many standards because of a lack of governing capacity, which is another hurdle that must be addressed. Businesses that are being adversely affected by the increasing integration of the global economy are some of the main actors who should be willing to push this agenda, and are the most central to the question at hand.
The real question that all of us need to ask ourselves is what do we want out of our economic (and political) institutions? Free trade arrangements, while having the potential to benefit the populations of both countries, have in fact tended to favor mostly multinational corporations at the expense of both domestic capital and local populations. What is needed is a strong response from those being hurt by such arrangements, and attempts to change the current situation towards the benefit of a larger proportion of both the corporate and total populations.
It is a very obvious concept to have monopolizing companies rule and reign in the market place, but how do they effect the economy and others businesses as well? The multinational level of business incorporates many of the levels of market that only a few businesses can compete with. With the financial gain of becoming a multinational company a majority of these companies have a large flow of capital to initiate this change and their growth becomes tremendous after the move is made. Unfortunately the competition grows farther and farther away from smaller businesses. Little by little the business landscape is altered by the growth of these companies.
Imagine owning a clothing store that competes with those in a national market and within 5 years your company grows overseas. That step has drastically changed the flow of competition within the local market place, but not necessarily in a negative way.
The negative change for the small business is that they simply become the «flakes that are frosted» competing with the Kellogg’s Frosted Flakes. They are the small generic brand that possesses no real title. Unfortunately it has an effect on their business because the average consumer is not your average researcher. Meaning that one would rather buy what they know others enjoy rather than figuring out if the product is good enough for them on their own. The continuing and most prominent negative effect on the smaller business is that most multinational companies have a major impact on governmental policies that affect the economy in major ways. An example would be an overseas company that stimulates a large amount of revenue for the Unites States may in turn be able to alter a decision the government wants to make on taxes and tariffs. Meaning if the government wants to raise taxes on imports and exports a large company may pull their production from the U.S. which in turn will create a loss of capital gain, an effect on the local market and worse of all a mass loss of jobs. That collectively can have a major impact on the economy forcing consumers to pay more for products they want and not carrying the monies they had before dropping the overall rate of consumption. With little money to spend small business now compete with the multinationals and the dropping rate of consumption which, many times, leads to the business closing down. This is obviously a worse case scenario and though very common it is not a certainty because there is a flip side.
How can a multinational have a positive effect on the local and small business realm? First and most obvious, is the simple fact that larger corporations and businesses have a larger amount of capital flowing from their business to cover the cost of their overhead. This consequence to growth in many ways forces the company to raise their prices and sometimes lessens the interest of the consumer. The example is simply my shirts that once cost four dollars now cost eight dollars and I don’t want them anymore because of this change. In business terms and on the grand scale, that ripple effect leads to a many problems for the big guys and for the little guys it shines a bit of hope. If the consumer doesn’t want the big guy’s product they certainly still want the product and will find it. So this opens a major door for smaller businesses because the small business product is always unique and will always draw people in. This also leads to more productivity and a greater growth in the smaller companies. More jobs are created and the economy little by little begins to rise.
There is no obvious way for the small business to fight against the changing landscape that multinationals cause, but the easiest barrier is to keep unique. Consumers will always try something new and different when it is offered. How many burger places are out there and how many have gone out of business? Each offers a unique burger and they sill thrive. So it’s the continuing of product diversification that may possibly counter the effect that these multinationals have on every other business.
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