Free Essay: Challenges Facing Multinational Corporations
Multinational Corporations MNCs or Multinational enterprises [MNEs] are organizations operating in two or more countries commonly known as the host countries, but managed from one country, the home country. These are organizations that drive revenue from operations in countries other than their home country. The objective of MNCs to operate and succeed in other countries is simply to gain competitive advantage in many ways. However, there are numerous challenges faced by these organizations.
Multinational Corporations have played great roles in globalization. Through the increased number of MNCs globally, there are notable ways that these organizations have always embraced to satisfy their target audiences. MNCs benefits from these ventures by taking advantage of difference in country-specific situations. For instance, they may choose to locate its production in less developed countries in order to gain cheap labor costs. These organizations also reach many other countries in the global to enjoy economies of scale.
Multinational Corporations are able to choose the best serving mode that will satisfy their target audience and these includes licensing, exporting and direct investment. Despite the many benefits presented by Multinational Corporations, there is wide range of overlapping and conflicting challenges that affect these organizations globally. These include;
- Regulatory changes and increased regulatory inspection and investigation have been one of the common challenges affecting many corporate organizations. Regulators create a lot of pressures that affect most of the multinational enterprises. Major adjustments that come with regulatory changes are also understandably tremendous and present many risks. To succeed in the business market and overcome this challenge, it is wise to evaluate changes in the business environs, identify any emerging risks and try to solve them in a matter of significance.
- Economic conditions– Every marketer should be aware of the many challenges that are brought about by failing economy. Economic conditions change from time to time with business cycle. Economy conditions in a country are easily influenced by macroeconomic and microeconomic factors such as fiscal policies, unemployment levels and inflation or exchange rates
- Global political and economic volatility. Politics have impacted the globally economy in many ways. Lack of stability in politics has affected the success of Multinational Corporations. Quick change of the value of an investment, market or the market sector has made most of the multinational organizations in the world successful or at risk of instant fall from grace. Hence, stable governments and market sectors have made it easy for most of these large enterprises successful.
- Gradual growth through existing customers has also been of great influence to the multinational corporations. It is wise to embrace organic growth in business, but for many developing companies have not been able to keep and maintain existing customers. Some companies fail to define their own value and the many benefits customers’ to revel in from the business. Understanding what customers want is a great way to get started.
- Keeping up with competitors has also been a challenge for many organizations. More and more corporations are emerging and it has been a challenge for most developing companies to keep up with the stiff competition. Despite the consumer spending slowing down globally, it is wise to defend an organizations position and maintain the company’s competitive edge.
Failing to adapt to business structure, utilizing available information or failing in crisis management are other problems faced by most MNCs. Fortunately, it is easy to overcome these challenges if focused. All this can be possible if you know your customers, know the competition, updating corporations’ image or stepping up the marketing strategies. Any mistakes a company makes can be costly and it is wise to apply double standards and solve these problems.
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