Multinationals Corporations free essay sample

Multinational corporations (MNC’s) also known as International Corporation, transnational corporation, global corporation and many more. Due to the political changes that have occurred during the years, the opportunities for multinationals corporations have increased considerably. As a fact multinationals corporations are growing with rapidity. For example in Mauritius we have KFC, Mac Donald’s, Pizza hut which are all multinationals and have branches throughout the island. According to the United Nations a multinational corporation is an enterprise which owns or controls production or service facilities outside the country in which it is based. In the words of W H Moreland, Multinational Corporations or Companies are those enterprises whose management, ownership and controls are spread in more than one foreign country. Thus a multinational company carries on business operations in two or more countries. Its headquarters are located in one country (home country) but its activities are spread over in other countries (host countries). We will write a custom essay sample on Multinationals Corporations or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page The transnational corporation as it is known today, however, did not really appear until the 19th century, with the advent of industrial capitalism and its consequences: the development of the factory system; larger, more capital intensive manufacturing processes; better storage techniques; and faster means of transportation. During the 19th and early 20th centuries, the search for resources including minerals, petroleum, and foodstuffs as well as pressure to protect or increase markets drove transnational expansion by companies almost exclusively from the United States and a handful of Western European nations. Sixty per cent of these corporations investments went to Latin America, Asia, Africa, and the Middle East. Fuelled by numerous mergers and acquisitions, monopolistic and oligopolistic concentration of large transnationals’ in major sectors such as petrochemicals and food also had its roots in these years. The US agribusiness giant United Fruit Company, for example, controlled 90 per cent of US banana imports by 1899, while at the start of the First World War, Royal Dutch/Shell accounted for 20 per cent of Russias total oil production. Demand for natural resources continued to provide an impetus for European and US corporate ventures between the First and Second World Wars. Although corporate investments from Europe declined somewhat, the activities of US TNCs expanded vigorously. In Japan, this period witnessed the growth of the zaibatsu (or financial clique) including Mitsui and Mitsubishi. These giant corporations, which worked in alliance with the Japanese state, had oligopolistic control of the countrys industrial, financial, and trade sectors. The characteristics and features of Multinational Corporations (MNCs). The distinctive features of multinational companies are as follows. 1. Large Size: A multinational company is generally big in size. Some of the multinational companies own and control assets worth billions of dollars. Their annual sales turnover is more than the gross national product of many small countries. 2. Worldwide operations: A multinational corporation carries on business in more than one country. The MNCs operate in many countries with multiple products on large scale. A MNC may operate both manufacturing and marketing activities in a number of countries. Some MNCs operate in several countries, whereas, others may operate in a few countries. Mostly MNCs from developed countries dominate in the world markets. Multinational corporations such as Coco cola have branches in as many as seventy countries around the world. 3. International management: The management of multinational companies are international in character. It operates on the basis of best possible alternative available anywhere in the world. Its local subsidiaries are managed generally by the nationals of the host country. For example the management of Hindustan Lever lies with Indians. The parent company Unilever is in The United States of America. The Parent company works like a holding company. The subsidiary companies are to operate under control and guidance of parent company. The subsidiaries functions as per the policies and directions of parent organization. 4. Mobility of resources The operation of multinational company involves the mobility of capital, technology, entrepreneurship and other factors of production across the territories. 5. Integrated activities A multinational company is usually a complete organisation comprising manufacturing, marketing, research and development and other facilities. MNCs undertake both Manufacturing and Marketing Activities and they are predominantly engaged in hi-tech and consumer goods industries. Majority of the MNCs are engaged in pharmaceutical, petrochemicals, engineering, consumer goods, etc. 6. Several forms A multinational company may operate in host countries in several ways i. e. , branches, subsidiaries, franchise, joint ventures. Turn key projects. 7. Origins. The development of MNCs dates back to several centuries, but their real growth started after the Second World War Majority of the MNCs are from developed countries like U. S. A, Japan, UK, Germany and European countries. In recent years MNCs from countries like Korea, Taiwan, India, China, etc. are operating in the world markets. 8. Profit Motive. MNCs are profit oriented rather than social oriented. Such corporations do not take much interest in the social welfare activities of the host country. 9. Quality Consciousness MNCs are quality and cost conscious and managed by professionals and experts. They have their own organization culture and systems. MNCs believe in the concept of total quality management. Aims of multinational corporations Multinational companies make investments in different countries with the following aims. (a) To take tax benefits in host countries; (b) To exploit the natural resources of the host country; (c) To take advantage of Government concessions in host country; (d) To mitigate the impact of regulations in the home country; (e) To reduce cost of production by making use of cheap labour and low transportation expenses in the host country. (f) To gain dominance in foreign markets; (g) To expand activities vertically. Advantages of multinationals corporations. The merits of a multinational corporation may be enumerated as follows: 1) Costs Controls. Operating overseas can take advantage of lower labor costs in the same way as outsourcing, while allowing greater supervision and control to ensure quality. A multinational corporation can also benefit from reduced transportation costs. For example, a jewelry company could save money by setting up a branch in a country with gold mines, making rings locally, then shipping them to the home country for retail, rather than shipping the gold to the home country for local manufacture. Multinational corporations carry on operations on a large-scale, which ensure economics in material, labour and overhead costs. 2) Taxations. Having operations in multiple countries may allow the company to take advantage of tax variations. The company could place its business officially in the country with the lowest tax rates, even if management is elsewhere. Running a multinational corporation can help the business benefit from the tax systems of countries that require the company to have a physical presence to benefit from low rates, rather than simply operate a shell or paper company. 3) Consumer benefits. A multinational corporation that benefits from both low production costs and low taxes should be able to make increased profits while reducing prices, which benefits consumers. The company may also have access to knowledge and skills in multiple countries that could help it produce better products. 4) Research and development activities. Developing countries lack in research and development areas. Expenditure on research and development is essential for the promotion of technology. Multinational corporations have greater capability for research and development activities in comparison to national companies. Multinationals survive in the international market through their advanced research and development activities. 5) Far-reaching effects on the economic, social and political conditions of the host country. Multinational corporations provide a number of benefits to the host country in the form of (a) Economic growth; (b) increased profits; (c) Developing of new products; (d) Reduced operational costs; (e) Reduced labour costs; (f) Changing social and political structure, etc. Thus, it helps in the exploitation of resources of host countries for their own economic advancement. ) Product innovation Multinational corporations have research and development departments engaged in the task of developing new products, diversification in the product line, etc. Their production opportunities are far greater as compared to national companies. 7) Marketing superiority Multinational corporations enjoy market reputations and face less difficulties in selling their products by adopting effective adv ertising and sales-promotion techniques. 8) Financial superiority Multinational corporations generate funds in one country and use such funds in another country. They have huge financial resources at their disposal as compared to national companies. Moreover, multinational corporations have easier access to external capital markets 9) Technological superiority Multinational corporations can participate in the industrial development programmes of underdeveloped countries because of their technological superiority. They can produce goods having international standards and quality specifications by adopting the latest technology. Generally, multinationals transfers technology through joint venture projects. 0) Potential source of capital and advanced technology Economically backward countries invite multinational corporations as a potential source of capital and advanced technology to generate economic growth and to create employment opportunities. 11) Expansion of market territory Multinational corporations enjoy extension of activities beyond the geographical boundaries of their countries. Multinational corporations can enhance their internati onal image by expanding their operations activities. 12) Creating employment opportunities Increase in the scale of operations results in more job opportunities. The entry of multinational corporations helps in creating employment opportunities in production and marketing activities. Disadvantages of multinational corporations. The possible disadvantages of a multinational investing in a country may include: 1) High Profit Low Risk Investment The multinational company prefers to invest in areas of low risk and high profitability. Issue like social welfare, national priority etc. have less priority on their agenda. Mostly they invest in consumer goods industry. 2) Interference in Political Matters. The multinational company from developed countries interferes in the political affairs of developing nations. There are many cases where multinational company has bribed political leadership for their own economic gains. Multinational investment can be very important to a country and this will often give them a disproportionate influence over government and other organizations in the host country. Given their economic importance, governments will often agree to changes that may not be beneficial for the long-term welfare of their people. 3) Create Artificial Demand. These companies create artificial and unwarranted demand by making extensive use of advertising and ales and promotion techniques. 4) Exploitation. These companies are financially very strong and adopt aggressive marketing strategies to sale their products, adopt all means to eliminate competition and create monopoly. 5) Technological Problem Technology they use is capital intensive so sometimes that technology does not fully fit in the needs of developing countries. Also, multinational company is criticized for transferring outdated technology to developing countries. 6) Foreign Exchange go outside the Country The working of multinational company is a burden on the limited resources of developing countries. They charge high price in the form of commission and royalty paid by local business subsidiary to its parent company. This leads to outflow of foreign exchange. 7) National Threat. Sometimes outdated technology is used by domestic industries which hamper the quality and price of their products so they cannot compete with those multinational company. Hence, there is a threat of nationwide opposition to multinational company. Arrival of these companies creates an atmosphere of uncertainly to the domestic industries. 8) Cultural and social impact Multinational company imposes their culture on developing countries. Along with the products they also indirectly impose the culture of developed nations. These companies have imposed the culture of fast food and soft drinks onto the developing nations. For examples: burger and coke. Large numbers of foreign businesses can dilute local customs and traditional cultures. For example, the sociologist George Ritzer coined the term McDonaldization to describe the process by which more and more sectors of American society as well as of the rest of the world take on the characteristics of a fast-food restaurant, such as increasing tandardization and the movement away from traditional business approaches. 9) Environmental impact Multinationals will want to produce in ways that are as efficient and as cheap as possible and this may not always be the best environmental practice. They will often lobby governments hard to try to ensure that they can benefit from regulations being as lax as possi ble and given their economic importance to the host country, this lobbying will often be quite effective. 10) Transfer pricing. Multinationals will always aim to reduce their tax liability to a minimum. One way of doing this is through transfer pricing. The aim of this is to reduce their tax liability in countries with high tax rates and increase them in the countries with low tax rates. They can do this by transferring components and part-finished goods between their operations in different countries at differing prices. Where the tax liability is high, they transfer the goods at a relatively high price to make the costs appear higher. This is then recouped in the lower tax country by transferring the goods at a relatively lower price. This will reduce their overall tax bill. 11) Access to natural resources. Multinationals will sometimes invest in countries just to get access to a plentiful supply of raw materials and host nations are often more concerned about the short-term economic benefits than the long-term costs to their country in terms of the depletion of natural resources. 12) Export of Profits Large multinational are likely to repatriate profits back to their home country, leaving little financial benefits for the host country. Conclusion. A multinational corporation/company is an organisation doing business in more than one country. In other words it is an organisation or enterprise carrying on business in not only the country where it is registered but also in several other countries. It may also be termed as International Corporation, global giant and transnational corporation. Like every concept multinational corporations (MNCs) also have certain advantages as well as some disadvantages both to the host country and the home country.

OPTUS on Facebook

OPTUS on Facebook Introduction Communication is extremely vital in information dissemination and thus many companies rely heavily on it for clientele outreach (Fielding, 2006). The quest for efficiency, therefore, becomes a major concern for many businesses when choosing the right forms of communication in order to maximize effectiveness and wider market reach.Advertising We will write a custom report sample on OPTUS on Facebook specifically for you for only $16.05 $11/page Learn More This dictates the need for market understanding and clientele destinations so that the chosen communication media can easily reach the targeted clientele at the right time (Nielsen, 2008). This implies that there has to be a lot of care in media selection for maximum output. In return, this will ensure that the set objectives are achieved within a given time frame. Needless to say, an effective communication platform is an integral requirement for business growth and profitability. While market expansion entails maintaining long term relationship with current clients and acquiring new ones, there is need to select the most effective communication models and the right communication channels for message deliveries and propagating the ideals of a business (Capelin, 2004). In most cases, one way communication is preferred but with the advent of new technology amidst a supportive business environment, it has become unavoidable necessity for feedback information regarding on-way statics and thus there is possibility that organizations can get information regarding the number of recipients of their one-way sent communication. Therefore, this improves a company’s influential judgment on choosing the right medium of communication. With diversity in information systems, different forms of communication that present suitability in several forms are readily available in the contemporary business world (Capelin, 2004). This therefore forces any communication type to put into con sideration the form that has to be relayed to respective stakeholders. The contact media also plays vital role in determining communication type to be employed in message relaying. For instance, in order to relay information through a visual communication system, it is required that the information form be either pictorial or in video form. Likewise, Fielding (2006) argues that using audio communication systems would require the use of audio messages and in the same way, published media will automatically require written messages or pictorial compositions. Electronic media can sometimes combine all of these information forms and relay them using one medium. However, suitability and reliability of the medium chosen will depend on area of coverage and the number of loyal subscribers to that medium of communication.Advertising Looking for report on business communication? Let's see if we can help you! Get your first paper with 15% OFF Learn More The higher the n umber of subscription in a communication medium and the larger the area of coverage, the favorable the medium itself for use as an agent of message dispatch. Since Optus is a multinational company that is based in Australia but still under expansive plans, there is urgent need to employ different and most appropriate channels of communication which will attract new customers and still retain the existing ones (Smith, 2009). With roughly more than ten products and services and while dominating the Australian market share in its category, Optus Solutions Ltd will seek to trap new markets outside the country and beyond the Australian continent in order to increase its capital base. The already successive expansive attempt into the Asian markets is yet another opportunity for the company. Optus is seeking to cross borders to capture new markets and maintain its dominance in the Information and Communication Technology industry. Purpose of the report The purpose of this report was to exa mine if the choice by Optus Solutions Ltd to use facebook as a medium of communication between the company and potential clients in its attempt to make further expansions was the best choice in achieving its objectives. Furthermore, the report was supposed to offer recommendations on the choice of media of communication for the company alongside other communication strategies that Optus should employ for optimum reach to its clients. Additionally, recommendations were to focus on effective communication strategies for the Optus Company even as it endeavors to expand. Scope While examining if facebook was the right and most effective media for use by Optus solutions Ltd in communication aimed at marketing, it was important to consider its use for new products and services advertisements and the future expansions and awareness rate of the facebook media. On the same note, it was also important to consider the efficiency of the media chosen by this company for its expansion purposes. M ethod Much of the information used in this report was largely collected from various sources. These included consultations, totally sovereign review of the company information from its own website, business oriented websites as well as facebook information available on this company in regard to expansion and communication in regard to attracting new customers and keeping existing ones. Additional information was also obtained from direct online survey of potential customers outside Australian region. This catered for additional information regarding knowledge of the company and its products. This information was gathered and documented for use in the report to determine if the company was using the right channels and media of communication to reach existing and potential new customers to the company.Advertising We will write a custom report sample on OPTUS on Facebook specifically for you for only $16.05 $11/page Learn More Online interviews were carried ou t to establish if all people living in the Australian continent were really aware of the company, its products and services before it embarked on its expansive plans. Same procedure was followed as above and all the information collected tabulated to analyse the awareness of the people regarding the company. Limitations In carrying out the online interviews, some respondents were unwilling to spare time for the interview citing reasons such as ‘wastage of their special time’ in response. Others could not present truthful information and thus some biasness in the information collected about the company. Locating the exact information about the company and its choice of forms of communication to reach its targeted population was extremely hard and thusmyriad of assumptions were inevitable in the writing of this report. Lots of information regarding the daily operations of this company is either kept highly confidential or the company does not provide the details of its da ily running and this was a great limitation in determining the exact statistical information needed for analysis. Assumptions It has been greatly assumed that the information available on websites and facebook regarding Optus Solutions Ltd is all accurate and thus largely used in the analysis and evaluation of communication strategies of the company. This information will enable the determination of the effective types of communication employed by Optus in reaching its targeted audiences. It has also been greatly assumed that all the information collected online from sources in the Australian peninsula is nothing but accurate information and thus has also been extensively used in the analysis and evaluation of the company as regards communication strategies and expansive plans. Thirdly, it has been also assumed that the products shown on the Optus website page of products and services are entirely the only products and services the company has to offer to customers in the Australian regions and beyond its borders. These products will be singly evaluated in the given regions; that is in Australia, Philippines and the Indian markets for determination of the ability of the company to venture into new markets in respect to effective communication (Capelin, 2004). Since every company uses a strategic medium in its effective communication to targeted audiences, it has been heavily assumed too that Optus Solutions Ltd is extensively using facebook as the strategic medium in its expansion efforts. This information available on facebook regarding the company and its products will entirely be used to promote the company in display and advertising of its products and services and present an effective communication tool by the company.Advertising Looking for report on business communication? Let's see if we can help you! Get your first paper with 15% OFF Learn More Background Optus is one of the largest telecommunication providers in the Australian region, fully owned by a Singaporean company called Singapore Telecommunications. Its Optus brand is its major brand under which it trades but has also other subsidiary brands that it owns which operate under different names and these include, Boost Mobile, and Virgin M. Australia, which operate in the telephone industry, Alphawest in the ICT industry and in others in the network industry like Uecomm. Initially this company was fully owned by the government and was known under a different operating brand name which was Aussat Pty. It underwent a rebranding thus changing its name to Cable and Wireless Optus Pty that lasted for a period before another rebranding to its present brand name Optus. With successful rebranding, this company has undergone multiple transitions and in the process gained and lost potential clients in the process of rebranding since some clients are not information conscious. Th e company owns a large portion of the fixed telephony services in the region with commercial POTS that represent its ability to serve the local and international regions, that is, it is able to reach the local and distant regions. It also owns commercial voice over internet protocol, voice over DSL and intelligent network applications. In the mobile telephony industry, it covers the largest share in the market by owning a GSM and GPRS service that covers almost all the Australian population- approximately ninety seven percent of the total population. It also has a great 3G and HSPA service industry that covers approximately more than ninety seven point three percent of the total population of Australia. It again owns the satellite telephony industry that covers the whole of the country. Besides the telephony industry, the company owns other services in the internet provision industry which include Residential Dial-Up services that expand in all the states, residential Broadband inte rnet services which are run through a cable system and DSL that span in all the states except the northern regions. It also has satellite internet services that it runs through its geostationary satellites, a secure gateway services that are specially offered to the national government and commercial internet access. In addition there is also cable television known as Optus television provided in the largest cities of the country. It also has data transmission services and other services offered through leased lines. Its terrestrial infrastructure spans over the largest cities of Australia, its satellite infrastructure spanning through the regions of geostationary satellites, the international earth points of geostationary satellites and the national earth stations in major cities in Australia. The company has a customer access base network of major cities including Sydney, Brisbane, Canberra, Wollongong and Adelaide to name just but a few. Other accessible regions include regions w here the company is able to provide coaxial cables. In other words the company has the ability to reach the whole market of Australia since accessibility is possible everywhere within the country for the diverse products and services it offers (Smith, 2009). The company announced its international expansion plans in the year two thousand and three and a year later, it was able to launch a short messaging service that could reach more than ninety countries worldwide. This was its clear move towards internationalization but then no clear communication strategy was shown in regard to the expansion and how the markets had been acquired. Today the company looks forward to making further expansions in the mobile telephony industry into other countries of the world including the Asian region and the African peninsula. Findings According to data and information available on facebook, the following tabulated report was drawn. This took into consideration all the products and services that th e company offers and their status on facebook as a media of effective communication for purposes of retaining and acquisition of new customers in its expansion endeavor. Although most products could not be found on facebook, the results had to constitute each and every product of the mother company since effective promotional strategies through effective communication has to happen in every department and thus each product undergoes the same effect. Optus products and services as shown on facebook pages Product present on facebook likes dislikes Company yes 52,284 Not shown Mobility No N/A N/A Network yes 0 0 Enterprise communication No N/A N/A Satellite yes 3 0 Security yes not shown not shown Global yes 50 0 Discussion Australia by itself alone is a country with a population of more than twenty two million people and out of these, more than ten million people- reflecting more than forty five percent, have signed up for facebook accounts. This is a translation o f approximately half the Australians on facebook but as evident from the above results, it is extremely clear that Optus popularity on facebook is extremely low. Being a multinational company that operates in the whole of Australia and being one of the largest telephony providers in the region, the company has only managed to gallon a whopping total of only 52,284 likes from its existing and or potential customers (Jones, 2010). This represents a shockingly low popularity level for a company brand like Optus. This implies that its communication strategies are not fruitful or the facebook communication strategy in not highly effective. This is also indicated by the presence of one of its services, that is, networking as a service also has shockingly low number of likes; an indication of unpopularity. The satellite service has as well received a tremendously low popularity on facebook; another clear indication of extremely low popularity. Products which include, Mobility, Enterprise c ommunications, Global and ‘Telepresence’ were conspicuously absent on facebook implying nonstrategic efficiency in communication (Fielding, 2006). Optus company brand on facebook page consisted of graphical image with persuasive writings on it, encouraging new and old customers to participate in liking the company and finding the key master company for a chance to win a trip. This is a marketing strategy which reflects likings from hopeful winners and thus, not people who really like the company. Basing on this, the company was trying to woo potential clients and thus the likes also represent people who even do not know Optus or have never used any one of its services. Although this strategy works in marketing for its expansive endeavors, actual reflection of potential customers in the internationalization efforts is not clear. The other products and services on the facebook page did not have any graphical or pictorial compositions but only word messages. This shows tha t the company did not use effective communication types like visual on the given media to communicate to its existing customers and attract new ones. Nielsen (2008) points out that effective communication embodies the use of all the four types of communication whereby visual communication has the greatest intensity followed by verbal or audio communication. Not denying the fact that the company uses these in its routine communication practices, they are scantly available on facebook and thus an implication of failure of communication. Failure of other products’ presence on facebook is a direct indication of failure of utilization of highly potential media in effective communication to various stakeholders- another landmine of poor communication skills (Capelin, 2004). Facebook is the most famous tool in social media and with more than eight hundred million subscribers and more than ten million Australians. This is an indication of enormous potential in facebook in communicati on since old and potential clients are found here. Recommendations and implementations Optus as a company with diverse products and services need to utilize effective communication skills to keep and acquire new clients (Nielsen 2008). The emergency of facebook as a social media provided the greatest potentials for extensive communication between individuals and companies. This thus should have been one of the best tools the company should use to make effective and transparent communication between stakeholders. The use of wall posts and other visual and responsive media on facebook should have been a priority. Traditional forms of communication which include radio and television should increase the familiarity of in the home environment (Gibson, 2008). Thus employment of visual and pictorial compositions on facebook and the launch of other products and services’ facebook profiles will greatly help in increasing the popularity of facebook. This should take place with immediat e effect with awareness campaigns in order for all stakeholders to be aware of any changes in product progresses. This would be the utilization of effective communication skill in presentation of relevant information to all stakeholders. Conclusion From the discussion above, it is clearly evident that Optus as a company had not utilized facebook as a media of communication for effective communication to various stakeholders. Australia by itself alone is a country with a population of more than twenty two million people. Out of the total population, about 45 percent are currently using facebook as their preferred social site as well as means to reach out for friends and other acquaintances. This implies that the company could greatly benefit from utilizing facebook as one of the channels of communication. Furthermore, Optus has a very strong presence on the physical environment with a familiarity percentage ranging close to 90 percent. On the other hand, it commands a tiny 3 percent on face book. The fact that the Australian population using population is relatively large implies that the company has been losing huge profits due to the unreached clientele base. This is a reflection of failed utilization of potential communication media in carrying out effective communication and hence marketing of the company. Other products and services such as satellite service have equally received tremendously low popularity on facebook. Needless to say, this may be yet another clear indication of extremely low popularity of the company especially on the bulk of the population. Others which include, Mobility, Enterprise communications, Global and ‘Telepresence’ just to mention a few were conspicuously absent from facebook (Jones, 2010). If such services are not firmly in place and worst of all, not recognized by the target, then it implies that the given company is by far and large, employing nonstrategic efficiency in communication. Failure of other productsâ €™ occurrence on facebook is a straight indication of failure of exploitation of highly potential media in effective communication to a range of stakeholders- an additional landmine of poor communication skills. Facebook is the most well-known tool in social media and with more than eight hundred million subscribers and slightly above ten million Australians. Indeed, it is a clear indication that facebook as a social utility presents numerous and potential opportunities to the business world such that proper utilization of the facility can indeed boost returns and profitability of a business entity. References Capelin, J. 2004. Communication by design: Marketing professional services. Atlanta: Greenway Communications. Fielding, M. 2006. Effective Communication in Organizations, Cape Town: Lansdowne Ltd Gibson, B. 2008. Case study report, Melbourne: Monash University. Web. Available from  https://www.monash.edu/rlo Jones, S. 2010, Optus Facebook Page. Web. Available from  ht tps://www.facebook.com/optus Nielsen, J. 2008. Effective Communication Skills, New York: Xlibris Corp. Smith, S. 2009. Telepresence managed. Web. Web.