Globalization and MNCs David Doleman INT 301

MNCs and Globalization Benefits outweigh the costs Case studies of MNCs taking social responsibility Downsides to Globalization Gains provided by Globalization Why we as America should care

Questions you’ll be able to answer What effects do MNCs have on the host country? How does the host country benefit? What does it lose? How are MNCs affecting the world? Are MNCs taking responsibility for their Global Influence?

What is a MNC?

A corporation or business operating in several countries while managed from one (home) country

What does a MNC look like? Big size A lot of intellectual capital Operates in many countries Large customer base Many competitors Ex. Nike, Google, Apple, Starbucks

Why? Cheaper Labor More resources Access to new markets More technical knowledge More direct investment Allows more people to access services Strengthens and stabilizes the business structure as a whole

How MNCs affect the developing countries

Downsides Relatively few jobs for the other countries Selling Junk Foods May acquire monopoly power May misunderstand the local culture Concern is about profit primarily rather than the host country’s interest Inflexibility in terms and conditions Heavy use of non-renewable natural resources

MNCs current effects in India Large amount of tax collections through MNC’s Increased revenue Economic health improved Employment increased Foreign relation increased

Nike Case Study The majority of Nike's manufacturing takes place in developing countries. Nike has launched its 'Transparency 101' program “Transparency 101 is monitoring factories in each country where Nike operates and ensuring that the practices in each are in line with its code of conduct.” The 'Reuse a Shoe' program which, since its inception, has enabled some 13 million pairs of athletic shoes to be recycled

How MNCs affect the host nation and why we as America should care?

Case Study: Microsoft Corporation “The contribution of U.S. multinationals to the overall U.S. economy often extends beyond their main business practices of hiring and paying workers, buying inputs, and investing in capital and R&D. Many of these multinationals interact with schools, governments, and other institutions in ways that foster the human capital and institutions that help increase U.S. productivity.”

Benefits The host country brings more capitol to the country “The worldwide operations of U.S. multinationals are highly concentrated in America in their U.S. parents, not abroad in their foreign affiliates.” International engagement drives the overall strength of a nations economy Success as a nation depends on how competitive that country’s businesses are globally.

Costs The host county looses revenue to other countries through foreign taxes. For this reason, further globalization means that wealth will be more spread out among countries as they pay foreign taxes The host country looses some control over these business making it more likely that they could become a monopoly

Global Benefits When competition increases, more employment opportunity are available. When competition increases quality of services go up Gives advantages to the purchasing country with the purchasing of raw materials New companies can now network to expand their business

MNCs are influencing the globe Globalization internationalizes the financial and natural resources of a nation while creating interdependency among multiple nations The question is “Globalization or denationalization?”

Takeaways The Benefits outweigh the costs MNCs promote global economic interdependence Globalization is both necessary and beneficial to the main country as well as the foreign country

References Atenzio, Charles V. The Impact and Potential Role of Multinational Corporations in Achieving Sustainability in Latin American Countries. Thesis. Massachusetts Institute of Technology, N.p.: n.p., n.d. Academia.edu. Web.. "How Much Do U.S. Multinational Corporations Pay in Foreign Income Taxes?" Tax Foundation. N.p., n.d. Web. 01 Oct THE IMPACT OF MULTINATIONAL CORPORATIONS ON INTERNATIONAL RELATIONS -A STUDY OF AMERICAN MULTINATIONALS. Thesis. Middle East Technical UNIVERSITY, N.p.: n.p., n.d. Web. Koksal, Evren. The Impact of Multinational Corporations on International Relations- A Study of American Multinationals-. Thesis. Middle East Technical University, N.p.: n.p., n.d. Web.. Kumar, Rakeesh. "Role of Mnc's in India." Role of Mnc's in India. N.p., 19 Sept Web. 01 Oct "Nike." Case Study. N.p., 01 Oct Web. 01 Oct "Pepsi's Entry into India: A Lesson in Globalization." |Business Strategy|Case Study|Case Studies. N.p., n.d. Web. 01 Oct Slauughter, Mathew J. "A Strategy to Strengthen the US Economy." CBR Chinese Business Review (2011): n. pag. Business Roundtable and The United States Council Foundation. Web.