Evaluate the influences of Multinationals through Globalisation

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EVALUATE THE INFLUENCES OF MULTINATIONALS THROUGH GLOBALISATION

A multinational is a firm which has its headquarters in one country but with bases, manufacturing or assembly plants in others. A company would have a number of objectives which would drive them to expansion including:

o Increased sales and revenue

o A chance to sell in markets where incomes are growing most strongly

o Shareholder pressure to maintain profit growth

o The opportunity to diversify into a range of markets so that heavy dependence on one or a few markets, which could decline, can be avoided. This reduces risk.

The process of globalisation has three distinguishable phases for the individual business:

o Companies with a national focus look to expand their markets by selling abroad.

o They develop bases in overseas markets from which they can service their sales activities.

o They go on to develop sources of inputs based on the cost advantages of a wide variety of locations.

Global companies have passed through each of these phases and have fully integrated operations. They then go on to expand through inorganic growth.

Developing countries are often delighted to welcome multinational