Multinational Companies

To define the underlying problems faced by multinational companies we should henceforth first try to
define multinational companies in laymen terms. Multinationals as the name refers to is a company
which has its business extended across borders and goal is to monopolize the market there depending
on the market they are trying to target. What may cause hindrance in the growth of a local business
might not be the same problem faced by a multinational growth as there is an enormous amount of
difference on the scale they are targeting people.

Every country sustains from the revenue generated through taxes and one of the taxes imposed on a
multinational companies are tariffs, corporate taxes depending upon how strict the government is and
how the taxation system works. The first and foremost problem of a multinational company is to
negotiate with the government in such a way that their goal of increasing their profit does not part ways
with government aims. Looking it from a corporate point of view finding “loopholes” in the taxation
system is the key, and from the government point of view multinational companies should be heavily
taxed to increase their revenue. Now as the multinational company has entered the market legally now
the other problem is competing with the local market which mostly the people will prefer as trust have
been developed between them. So multinational companies should penetrate the market in such a way
that a trust system develops between the consumer and the seller. Now here the dynamics of marketing
play in, marketing techniques differ from place to place and before marketing statistical analysis should
be done on what kind of consumer is being target for example Doritos sales increased their sales by
almost double as they introduced “Pride Chips” representing the rights of homosexuals, but in more
conservative areas a company cannot market like this for example Saudi Arabia.

Now comes an additional issue to target “licensing”, it is an issue for MNC’s having their business direct
relation with the environment. For example mining companies also have to present a feasibility report
to the government on how the vegetation that will be effected during mining should get restored, is the
environment in which the labor will be working is safe?, and the goal is to satisfy the concerned
authorities that minimal damage will be done and that employment will be created in the long run
which will directly boost up the country’s economy especially the developing countries. Now slowly we
can picture that how ethics come in here. Every society have different moral and ethical codes which are
not written somewhere rather is inferred through the acts done by majority people in society. Ethics in
its own is a relative term which changes from one geographical location to another hence MNC’s should
focus more on hiring highly skilled local workers who are familiar with the societal dynamics of the
place.

Considering penetration into the local market is done now conquering the market is the goal, this may
mean competition with other MNC’s working on selling the same product. Now comes the technique
called “stepping up your game”, and manipulation of market in the long term. Now at this stage an MNC
should be legally aware that any wrong step can land them into hot waters as they are now in
observation of everyone in the market. Attorneys should be consulted on which steps should be taken
and if this step is taken can by any choice they can end in court? Now things like child labor, low wages
should be targeted by the MNC’s that their workers are happy and the long term trust that have took
years to develop should not be broken.