Академический Документы
Профессиональный Документы
Культура Документы
This article discussed about the role of multinational corporations in integrating world
Multinational is also one of the reason globalisation takes place. I agree with this because in
1995, multinationals cranked out $7 trillion in sales through their foreign affiliates. This
amount is greater than the world’s exports. Multinational play an important role in global
investment. I agree with this where at the end of the 1996, the total stock of foreign direct
investment outside their home countries are over $3 trillion. World domestic and foreign
However, globalisation could easily make multinational companies less important. This is
because, as transport costs and trade barriers fall, it becomes easier to serve foreign markets
by exporting, rather than establishing factories and research centres around the world. And as
capital markets become more integrated and liquid, it is easier for single-country firms to
raise money by selling bods or shares. The basic reason for multinationals growth is
economies of scale. However, the notion that economies of scale force companies to become
multinationals does not hold up. But, firms find economies of scale at a level other than that
of the factory floor. Let us take Coca-Cola as an example. Economies of scale playing its role
in other areas such as reinforcing its brand by making a global marketing effort and helping
its bottlers, most of whom are independent learn from the experiences of their counterparts in
other countries.
The next reason is vertical integration. The interdependence of suppliers and users of a
particular resource makes it difficult for such firms to cooperate, since there is always the risk
that one will try to undermine the other. This is the reason firms integrate vertically by
give way to those that can earn higher profits. As the world economy becomes more
integrated, it is to be expected that the companies most adept at crossing borders are those
that prosper. Many companies are serving other companies rather than household consumers.
For example, if multinational car manufacturers want to use the same headlights in cars
too. Although deregulation and privatisation have had a big effect on the telecoms industry,
the demands of corporate customers are helping propel the globalisation of that industry.
Multinational’s size and scale can make it possible for them to exert power in an exploitative
way. A multinational company can move from one country two another if the country’s law
is too restrictive. This may make it harder for governments to raise revenue, protect the
environment and promote worker safety. Critics fear an undesirable “ race to the bottom”,
Another critic is multinationals are exporting jobs to low-wage countries. But this is true in
some industries only such as textiles and electronics. The flow to developing countries,
therefore, are going directly to regions to highest growth prospect. FDI investment mergers
and acquisitions help to achieve economist of scale in marketing and distribution .In certain
industries and for certain products, the importance of multinational companies is increasing
Even in manufacturing, speed, innovation and proximity to customers can matter more than