International Relations - Report Example

Assess the impact of Multi-(or Trans National Corporations on International Relations Introduction The multinational or transnational corporations have been successful at diversifying their business portfolios across a distinct base of locations. This has happened in the new business regimes of the present times. What it has done in essence is to create an effect which will live for a long period of time. Multinational corporations have been helped by the enormous growth potentials that have existed within their reigns. This has assisted in their respective capturing of significant markets within the global domains. On the same token, international relations have improved as well as deteriorated with their coming to unknown territories. Different markets have welcomes the move taken by such multinational giants but some of them have resisted the affect which has been created by them. The Role of Multinational Corporations on the Local Businesses Such is the eventual effect by these multinational corporations that many local businesses have winded up in a quick manner, thus putting them out of business in the wake of sheer competitive activity that these multinationals bring with their set agendas. The impact however has been on both sides of the divide – good as well as bad. The results have similarly been lopsided at times, favoring the business regimes in certain cases while bankrupting the parent organization in other instances. The sort of impact these multinational corporations have had on the global relations is something to ponder upon deeply though. This is because it is the international platform which indeed lays the success or failure basis for these multinationals. (Dunning, 2001) The Challenges Faced The multinational corporations worldwide face a number of challenges when they decide to go global. This is a common problem that they face since they do not have any prior knowledge or understanding of the new territory that they will do their business from. However what best they can do is to find out and research the strengths and weaknesses of this area and hence upon getting the much needed knowledge, base their theories and strategies in a much more effective and efficient manner. This will help one and all to better understand what the new territory, region or country offers the business and the people associated with it. The best thing is that the benefits and disadvantages are determined even before the multinational corporation goes the global way and thus it saves itself from embarrassment which it might face without having proper knowledge and adequate research within it. The significant thing here is to get prepared and be ready for what is to come in the future as concerns to the multinational organization that one is talking about here. Within International Relations The problems could be endless as far as the international relations tenet is concerned, however the significant thing is to understand what is applied where and which kind of meaning is related with the different activities and tasks. The bureaucracy of a particular nation does not allow the big companies and multinational organizations from entering within it since it fears that people would easily go for them and hence forget the public sector. The attraction that the private firms and indeed the whole of the private sector bring with it is something of a confusing situation. This situation is made understandable by the presence of private firms and local organizations within the public sector domain. If the government with the help of its different institutions and corporations does not allow the private firms and the conglomerates to have their say within the different matters of the country, it is very important that the whole infrastructure of the nation would be brought to a standstill and people would have negative feelings about the private sector and/or the public sector. (Lipsey, 2002) The situation is made more alarming and distressing since the interaction between the players of the government and the private sector keeps on increasing with each passing day with red tape doing its bit at creating hurdles for not only the dialogues which are held between the two sectors but also the eventual users of the products and services brought to this new country by the private firms and the organizations. The Role of Multinational Corporations The public relations angle should work to its advantage which means that the multinational organization can reach out to the masses through factual and truthful information about its workings and the manner in which it is creating value for the end customers. The stakeholders also must be made realization of the fact that the organization has come to cater to their needs and it is in the best interest of their own to interact and communicate in a clear and direct way with the multinational organization. If they fail to do so it could be called as a drawback or a shortcoming which would come under the list of the multinational organization that is trying its best to make its mark in the new country and operate its business in a fair and smooth style. The pressure groups thus could only be settled if there is a one on one interaction with them and they must be told about the rights and wrongs of the business operations of the organizations and what it could do for their betterment and where the multinational organization would fall short on their chart of expectations. Case of McDonald’s McDonald’s the world over is operated under the banner of the main parental concern which is based in America. Whatever the subsidiaries the world over do, they have to seek the advice form the head office. This cannot happen that an office situated in Iraq comes up with a product, say burger that has its name after the former President of Iraq, Saddam Hussein, just to make the target audience realize that having the same burger would mean eating up the President for that matter. Keeping the creative aspects out of the picture, but whatever the subsidiary in Iraq does, it has to seek approval of the McDonald’s which is essentially based in the United States and if it does not hinder with the charter, mission and vision statements of the main headquarters, then only the changes can be allowed and granted to the Iraq concern. The subsidiaries having complete autonomy in changing their strategies over a period of time is one such basis for the parent to get involved and make itself heard in the scheme of things as well as give some sort of possible law and court angle that will curtail the subsidiary from playing with the name, equity and other related attachments of the parent in the first place. Hence it is very quintessential to understand that the relationship between the two in such a case be of a sound nature, one that harnesses the growth of the two and in the process facilitate in the building up of sales, revenues and image for the company in the end. Foreign Operations It is important to understand that the management of multinational organization must know the limits of its operations abroad. The focus should be on building positive relationships on a consistent and long term basis. The operating margin for the expense of establishing and starting operations abroad should be easily recoverable within a reasonable time period. The design should also include the managements goals, which come down from the investors of the company. The goals of management of a multinational organization should be to acquire specific knowledge of the partner, in a joint venture situation, as well as the financial aspects and the business environment. The currency of the host country along with the political situation and the economy are finer points of detail that the study must cover when analyzing the business environment. In a less formal sense the design of the study should cover relevant material so that when viewing the final report decision-makers will know with what they are becoming involved. Staffing a feasibility study is of major importance. (Barr, 2000) Not only must the members be competent in communication and understanding, but the management selecting the team must be confident in the abilities of each individual. Communication in international affairs plays a great role for the fact that different languages spoken and unspoken are involved. The communication through a translator let alone person to person communication can be vastly misconstrued. The individuals communication skills should be top-notch in order to be selected for the team. The members of the team should also be aware of the cultural factors that play a role in communication. Cultural interpretation and adaptation are a prerequisite to the comparative understanding of national and international management practices. Conclusion In the end, the multinational organizations need to understand that to exist in the relevant business industry as well as make a mark within the global partnerships; they need to devise the ways and means which have been mentioned above. It is only after sound strategic planning and proper guidance for all the subsidiaries by the parental concerns that the company as a whole succeeds and remains in the business even when there is a general failure in one of its departments, off shore offices or any strategic key business units for that matter. The need therefore remains to be as a single cohesive unit and do what has not been applied by others in the industry ever before. Then only when one can take its competitors, both direct as well as the indirect ones, head on and thus shelve the whole competition right in the face of it. Multinational enterprises have to be proactive in the approach rather than being reactive. They have to be skeptical as to what could happen next rather than sit and wait as to what actually would hit them and then they will start the rehabilitation and relief process. Bibliography BARR, Pamela S. (2000). When Firms Change Direction. Oxford University Press DUNNING, John H. (2001). Multinational Firms: The Global-Local Dilemma. Routledge LIPSEY, Robert E. (2002). Multinational Firms and Impacts on Employment, Trade, and Technology: New Perspectives for a New Century. Routledge Word Count: 1,647 Read More