How Have Changes in the World Economy Since 1945 Affected the Strategies of Multinational Firms Introduction The most common denominator of changes amongst multinational businesses is the increased sophistication of the market and the intense competition due to the expanding number of players in every industry…
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The General Agreement on Tariff and Trade have not only made it equitable for all international players to be in equal footing with local businesses in a large market but it also made the complicated taxation and tariff levies more simple and standard. The agreement enabled international organizations or entities to sell products at competitive prices that are comparable to the locally produced items. Market discrimination will not be dictated by price but will be governed by the sophistications of the buyer’s taste and preference. Other changes in the last sixty years include added protection of the patents of multi-national corporations. Harmonisation of International Laws that would include the New York Conventions on Arbitrations that applies to contracts between parties of different nationalities and the Cape Town Treaty that specifically governs international assets of multinational companies. The increased presence and respect of the international business community to the International Court of Arbitration have made conducting business in the international market safer and more secure. The available mechanisms and remedy to attain justice if not an equitable settlement is now simpler and straightforward. World Trade Organization The World Trade Organization over the past decades have endeavoured to break down trade barriers that impedes the free flow of goods from one country to another or even between several countries in an emerging market. Its sole aim is to liberalize and supervise international train to ensure that every member country trade and transact equitably and fairly amongst its other members. It provides a framework in the negotiations and also provides an arbitration mechanism to disputes between countries. One of the basic tenets of the World Trade Organization is the Most Favoured Nation Clause that ensures that a country transacting or is engaged in commercial trade in a particular country is given the same treatment as that of its local industry and even its traditional trading partners. To illustrate: Products of multi-national companies dealing in China should have the same treatment as far as its regulation, governance and taxes are concerned with products manufactured within the China. This means that the shelf prices of imported goods should not be far from that of the locally produced products (Bossche, 2005). Multinational companies have capitalized on the new opportunity to expand its market to include the one provided by the other countries where their host or home country has a trade agreement with. The onus of the strategies of multinational companies therefore is to reach a wider market as possible to ensure that market presence for their products includes these new markets. Increased visibility as far as media exposure is concerned to ensure that goodwill and name recall is associated to positive information about the company and the product they manufacture. General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade is a multilateral agreement regulating international trade through the “substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous manner” (Barton, et al., 2008). This translates to the reduction of prices or the equality and standardization of tariff and tax rates to all products. The impact of which is the
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The World War of 1945 proved to be a massive disaster for world’s economy with its most effects on the European countries and Japan. These two countries were considered to be the greatest raw material suppliers throughout the world which significantly fell down in the war years.
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