Re: The Benefits of Multinational Corporations
Posted 04 Apr 2008 09:59
Multi-National Corporations started along with Globalisation.
If you look at the history of companies, you will identify one common factor, they all start by being a home-grown company, some of them, in fact many in Asia and here in my heartland were family-own companies, and started to grow from small enterprises into a multi-million dollar corporation, still being in the community.
When it started to cross borders and venture overseas? At the stage of full maturity, when the market has been saturated and when the brand name has taken a foothold. The most compelling reason is for growth and cost-cutting. For example, a television manufacturer will see the benefits of moving their production base to where there is cheap labour, operating costs, sources of raw material, and large market demand for the product. There will be much cost savings in terms of production cost, and transportation cost, which is becoming increasingly expensive due to the spikes in the price of fuel oil.
If the environment and the components for the business to benefit and gain, then this part of the corporation will start to migrate to where it could maximise profit. The factors which contribute to draw MNCs into their country are all the pluses which will benefit its relocation:
1. Cost of factory lease, space and land use.
2. Skilled workers available, educated and capable, and lower paid compared with other locations.
3. Infrastructure, such as roads, transportation, and communication.
4. Supporting industries, sub-contractors, components and raw material suppliers available.
5. Productivity of workforce.
6. Security and safety.
7. Political stability and strong Law enforcements.
8. Tax incentives, rebates and stable currencies.
9. Reliable supply of raw material, available and at reasonable price.
10. Reliable Power supply, as little downtime as possible, and ideal running time 100%.
11. Little or no restrictions on foreign investments.
12. Nearer to the source of material, resources and sales outlets.
There may be more points to add, but they should all point to the Pro factor for a company to go over to other country and set up their operations there.
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