Essay
multinational corporations
- Institution
- University Of South Africa (Unisa)
the docuement disccues the paradox that was faced by multinational corporations in the midst of covid-19
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1THE PARADOX THAT IS PRESENTED BY COVID-19 IN THE RISE OF
MULTINATIONAL CORPORATIONS
NAME: NTOKOZO GIFT MUNZHELELE
STUDENT NUMBER: 57672377
DUE DATE: 14TH JUNE 2021
UNIQUE CODE: 859152
IPC2602
, 2
INTRODUCTION
Multinational corporations continue to play a significant role amidst the devastating
impact of covid-19 in the world. Multinational corporations are unequivocally good for
economies of developing countries, they provide jobs that were not present before,
and however, some critics often point out to minimum wages they are paid to workers
and the dangerous and exploitative working environments that workers often have to
work under additionally, MNCS bring in capital flow to developing countries by building
infrastructure thereby stimulating economic development in host countries however,
due to the covid-19 pandemic many MNCS have had to rethink and reimagine new
ways of how MNCS can be effective.
1. Private marketplace is becoming dominated by large MNCS.
Without doubt, MNCS play critical and seminal role in shaping the political economy
of developing countries in tandem with the global economy. Which in many way has
perpetually made them powerful and dominant in the private marketplace conversely,
because of their market dominance, multinational corporations are increasingly
dominating the private marketplace in myriad of countries, expansion, defined as a
growth in GDP and per capita income, leads to an increase in demand for goods and
services. Moreover, their dominance emerges from marketing superiority, as they
have access to more reliable and contemporary market information, viable advertising
and sales strategies, huge large distribution networks, access to international banks
and financial institutions.
MNCS can benefit from economies of scale by spreading research and development,
advertising costs across their global sales, amalgamating global purchasing power
over suppliers, and leveraging their technological and managerial know-how globally
with minimal extra costs. Hymer (1982) emphasises that multinational corporations
derive a huge segment of their power from their ability to operate, coordinate, and
efficiently manage transitions between states which is critical in the operations of
MNCS moreover, MNCS can and will shift production from high-cost to low-cost states
in the name of efficiency.
MNCS are tremendously effective at distributing unusual resources in the name of
maximizing profits or returns to shareholders. Profit maximisation is vital for any
company to succeed in a competitive market. Firms exist, because they can efficiently
allocate scarce resources in a profit-maximising manner. Consequently, multinational
corporations must exist because they can efficiently and effectively allocate resources
on global scale, which is indicative of them becoming dominant in private markets.
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