Multinational Companies in Dubai: Role and Challenges - Research Paper Example

Liberal trade policies, incentives, growing foreign direct investment (FDI), advancement in information technology, and communication have all stimulated the process of globalization (Lee & Tai, 2006). Multinational Corporations (MNCs) are the most powerful institution today. A multinational corporation can be defined as a corporation that engages in international production and that bases its management decisions on regional or global alternatives (Savitsky & Burky, 2004, p4). MNCs recognize the newly emerging markets in the developing countries and the transition economies as opportunities for expansion across borders and foreign markets.

To enhance shareholder wealth and to improve cash flows, multinational corporations have to enact strategies. The role of multinationals is enhanced because they provide the funds, jobs, and technical expertise to the host country. Multinational Corporations started aggressively spreading in Latin America and Asia and with the drop of the Iron Curtain, it also expanded its reach to Eastern Europe and the former Soviet Union (Savitsky & Burky). To have economies of scale and for comparative advantage, companies started to expand overseas.

In addition, consumer tastes are similar in different countries. Pressure from the shareholders and the workers urge companies to expand. (Savitsky & Burky). The multinational corporate wave continues to grow in its effort for a coherent global economy previously separated by culture, geography, or nationality. Dubai, one of the seven emirates that comprise the United Arab Emirates (UAE) is synonymous with high-quality life and it is the location of choice for multinationals. Dubai has earned a reputation as a pre-eminent commercial center with an innovative, dynamic, and entrepreneurial business culture (DubaiWorld, 2008).

The local government has a pro-business attitude and is committed to the private sector.