Beggie J.

Bucag BSIT 1A
Chapter 3
Learning Activities
Activity 1
1. Analyse the “global” nature of Multinational corporations.
A multinational corporation (MNC) is a company that operates in its home country, as
well as in other countries around the world. It maintains a central office located in one country,
which coordinates the management of all its other offices, such as administrative branches or
factories. Foreign direct investment in developing countries rose considerably in the 1990s, not
all developing countries benefited from these investments. Most of the foreign direct
investment went to a very small number of lower and upper middle income developing
countries in East Asia and Latin America. In these countries, the rate of economic growth is
increasing and the number of people living at poverty level is falling. Multinational corporations
are also seen as acquiring too much political and economic power in the modern business
environment. Indeed, corporations are able to influence public policy to some degree by
threatening to move jobs overseas, but companies are often prevented from employing this
tactic given the need for highly trained workers to produce many products. Despite in worries
over the impact of multinational corporations in environmentally sensitive and economically
developing areas, the corporate social performance of multinationals has been surprisingly
favorable to date. The activities of multinational corporations encourage technology transfer
from the developed to the developing world, and the wages paid to multinational employees in
developing countries are generally above the national average. When the actions of
multinationals do cause a loss of jobs in a given country, it is often the case that another
multinational will move into the resulting vacuum, with little net loss of jobs in the long run.
Subsidiaries of multinationals are also likely to adhere to the corporate standard of
environmental protection even if this is more stringent than the regulations in place in their
country of operation, and so in most cases create less pollution than similar indigenous
industries.

2. Do you think the positive effects of Multinational corporations outweigh the negative effects?
Why or Why not?
Yes. The positives effects of Multinational corporations would outweigh the negatives
effects. Multinational corporations have several advantages. First, they can sidestep restrictive
trade and licensing restrictions because they frequently have headquarters in more than one
country. Multinationals can also move their operations from one country to the next depending
on which location offers more favorable economic conditions. In addition, multinationals can tap
into a vast source of technological expertise by drawing upon the knowledge of a global
workforce. Despite the overall positive trends, national differences in government policies,
economic institutions, and technological capabilities will persist, posing challenges to policy
makers and business leaders.
 3. What do you think are the ways to lessen, if not eliminate, the negative consequences of
Multinational corporations?
Most of the consequences of multinational corporations are good; they are beneficial
for the nations they serve in terms of quality goods, low prices, and jobs for the community
inside the multinational companies. One way to lessen the negative consequences of
Multinational corporation is to learn the new trends because nowadays majority of
multinational corporations are entirely computerized. The main problem that I see is that
multinationals raise the bar for workers — everybody must know computers to work. Now, the
reason that the multinationals are so successful is that they use computers to streamline the
e.g. retail process, and this lowers the cost so that the Public flock to their stores instead of the
local, more expensive, Small Businesses. The newcomer to the city will not easily find a job — all
the unskilled jobs are glutted with competition.

Assessment Task
Essay
Answer the question in exactly 140 words:

1. How can a small local business enterprise compete against a global corporation?
Small businesses see tremendous opportunity for revenue growth through selling their
products and services internationally. It is challenging for businesses that do not have brand
name recognition overseas to get a foothold in a foreign market. To be successful, you have to
identify customer needs that your company can address with its products and services -- and
address them more completely than the competitors you will face in those countries. If you are
convinced that there is a market for your company’s products in a foreign country but you have
no experience marketing there, consider working with distributors, local entities who buy the
goods and sell them in that country. Another option in selling internationally is to look for
companies in the country you have targeted that sell complementary products to yours, or sell
through the same distribution channels. Shipping cost can cut into your profit margins
significantly when selling internationally. Consider a licensing agreement with a local company in
which it manufactures and markets your products and pays you a royalty.