Multinational orporations: Blessing or Damnation - Research Paper Example

Multinational Corporations: Blessing or Damnation Abstract This paper is aimed at analyzing the performance of Wal-Mart from different perspectives including social, economic, political, and technological particularly its overall existence as a blessing or damnation for the communities in which it is operating. Wal-Mart is the largest retail store of the world with more than 20% market share in United States of America only. The organization is successfully operating since 1962 until today and generating revenues for more than $370 billion. Research shows that the success story of Wal-Mart actually starts with the perfect utilization of the core components of retail internationalization. Multinational Corporations: Blessing or Damnation Wal-Mart started its operations in 1962 with its first retail store opened in Rogers, Arkansas. By the fourth quarter of 1970; the company had 276 stores throughout USA in its possession. Between the second and third quarter of 1980, the number of Wal-mart’s stores reached to the peak of 882 which ultimately leaded the company to become the market leader in the retail sector of United States of America. Until then the company had not stepped into the international market and now it was the time to take the major decision. So in 1991, the company started operating in other countries for the very first time. The first foreign country where Wal-Mart opened its initial most out let was Mexico. The company then started to operate in Canada and Brazil through getting hold of Greenfield investment. Later more out lets were opened in Hong Kong, Argentina, etc [And08]. Wal-Mart has actively utilized the retail internationalization which typically revolves around the incorporated concepts of who are the participants of internationalization, what are their aims and objectives, how they will be directing their growth plan, how they will make a success and everlasting entry in to a market of some foreign land, what mechanisms should be applied, how the adaptation or the consistency approaches will move on, what will be the company’s centre of attention after entering the market, how the growth will be sustained, what diversification strategies shall be applied and finally how the company will respond to the foreign land’s culture, economics, politics and other social aspects which are in one way or the other influential for both the organization and its customers/consumers [Daw06]. All these variables of retail internationalization have played a significant role in the ultimate success of Wal-Mart. The importance of retail internationalization can only be understood by making a link between the geographic and economic conditions of a country in which the multinational organization is operating. The multinational organizations such as Wal-Mart mark substantial prints on the mind sets and lifestyles of the community people they are serving. This can be noted by the fact that few years back when the trend of multinationals was not even developed people used to maintain distinctive and original life styles however, as soon as the multinationals grew up the overall world economy and culture met severe changes because when people of some other countries come and trade with foreign people they leave behind their indentifying marks which are then absorbed by the local civilians. On the other hand these foreign companies also accept the cultural and societal norms of the foreign land. In this way the overall culture of the globe has started to turn into a single yet most powerful social system. The geography of a country is also very important in changing or sustaining the lifestyle of its inhabitants [Nei04]. The famous slogan of Wal-Mart has the strongest impact over its success story and continuous line of achievement. The slogan is ‘Every Day Low Prices’ which attracts people from all over the world to come and visit their stores. It has the most captivating power as the general public and students who are already drawn with interest and loan payments are always looking forward to get some suitable place where they can manage to get best products with the affordable rates and quality. This slogan has also helped Wal-Mart to establish business in countries which have comparatively lower economies. This has enabled the organization to maintain the largest employee ratio among the world organizations while enjoying sales of more than $370 billion. The company has the largest market share of 20% in the United States of America retail market. However, despite of the unbeatable success of the organization it had to close down its out lets from Germany and South Korea which marked significant difference in the global expansion and internationalization of Wal-Mart. The withdrawal from the retail market of Germany and South Korea received greater attention from the researchers and analytics from all over the world that have put various conclusions about the unsuccessful operations of the world renowned organization including the economic and social aspects [Fra09]. Major factors for sustainable and socially just organization: Multinational organizations especially those operating in the retail market such as Wal-Mart need to establish certain rules and regulations regarding their course of action in the foreign land. Companies operate on the international level mainly for the purpose of generating more and more profits, increasing the market and customer share and finally to ensure their long lasting existence in the corporate world. All these aims and objectives needs to be fulfilled in accordance with the social and cultural norms prevailing in the host country. This ultimately leads the organization towards sustenance and success. Multinational organizations have larger burden of fulfilling the corporate social responsibility and social justice. The residents of a host country do not really accept the interference of some foreigners. They are usually very determined about what they want and what not. In such a scenario the multinational businesses cannot afford to have the negativities from the customers and therefore they go to every extent so as to maintain loyal and friendly customer share. Following are the factors which require to be fulfilled in order to gain socially just and sustainable status in a foreign society [Gar09]: Understanding the culture: The top management and employee needs to develop deeper understanding about the culture and social matters of the country they are aiming to operate in. For instance, if Wal-Mart plan to open out lets in some eastern country especially the one with Muslim majority then it would have to take very good care of their beliefs and customs, in such a situation company must try to avoid selling things which are prohibited or their consumption is considered illegal. Laws: The governmental laws and regulations especially those concerning with the tax and interest payments requires to be closely studied while operating in some other country. This saves the company from possible charges and violations against the law. Politics: The changing political scenario and the upcoming governments play a very crucial role for the sustenance of multinational organizations. As new government comes in it brings along new laws which are then imposed on overall business sectors and influence their productivity in one way or the other. In addition to this the political conditions such as the Arab Uprising also affects the business operations of the organizations because when people are not at mental peace then they show up significant changes in the buying patterns and decision making styles. Economics: Companies which are aimed at providing significant products range with comparatively lower price rates have greater opportunities to open out lets in countries which have lower economic trends or those which comes under the category of underdevelopment. However, multinational organizations such as Marks and Spencer would enjoy greater market share in countries with comparatively stable economies. Corporate social responsibility: CSR incorporates all the factors that are responsible for the sustenance of an organization operating in a completely novel environment with new employees and customers. It states that the organization have several obligations towards the welfare of the society since they are earning substantial profits from the residents of the society therefore they must also pay some regard towards their benefit and social upgrading [Con07]. Social justice: Building justice and removing the sources of discrimination is yet another important factor for the success of multinational organizations. This also plays a major role in developing the overall social status of the society and also the living standards of the people. Technology: The multinational organizations particularly those which have originated from the land of most advanced countries generally bring various technological and advancements along with them which brings ease and success to the people in addition to other innovative ideas which compels the company to introduce further products [Yos04]. Expansion of Wal-Mart: The strong and highly influential business model has facilitated Wal-Mart to flourish in Central America and Salvador. The main constituents of the business model include the economic impact that Wal-Mart has made over the people of these areas by giving them extensive job opportunities, the good and respectful labor relations, the communal recruitment and the strong link with the global economy. In addition to these the other factors which have advanced the expansion of Wal-Mart in these areas includes its ever famous slogan, the exceptionally good supply-chain management, internal and external cultural environment of the organization, vast job opportunities, affordable prices and acceptable wage rates, pleasant working conditions and the list goes on [Sch03]. Economic impacts: Wal-Mart blesses the host countries with the unlimited opportunities in order to be successful in the economic terms. It gives extensive job opportunities along with the recognition and respect in the society, the wage rates and salaries given by Wal-Mart are substantially higher than other national or multinational organizations which make it an attractive package for the employees. Other then this it serves its customers with products priced at comparatively lower market prices thus maintaining the essence of the low price slogan. All these economic variables in addition to other combine together to make up the successful existence of Wal-Mart which is then further followed by greater revenues and business opportunities [Hic07]. Cultural impacts: When people earn more money they generally show up significant changes in the cultural trends and social values. Wal-Mart gives its employees as well as customers the opportunity to enjoy the pleasant working conditions within the social and cultural limits imposed by the society. However, like every other multinational organization Wal-Mart also plays its part in changing the culture of the society in a way that it makes rules and regulations consistent with other worldwide operating outlets. These rules and working norms are at first novel to the people of foreign land but within some time they adjust themselves according to it hence marking change in their own culture [Placeholder1]. Impact over local industry: Wal-Mart effects the operations of local industry to a much greater extent because the overall supply chain of the economy in which multinationals such as Wal-Mart is functioning revolves around its business activities simply because Wal-Mart has the largest display of products. Therefore it does not really prove to be beneficial for the sustenance of local industry rather it focuses more on its own production level and services that it is extending to the customers [Lic06]. However, the impact that it might make over the local industry is also affected by the economic performance of that country. If the country is already maintaining exceptionally good economic conditions then it is possible that Wal-Mart might not affect the industry in some negative way otherwise it is pretty much evident through its size and operational level that Wal-Mart would never prove to be helpful for the local industry. It operates upon the strategy of retail internationalization which calls for strong corporate culture. Hence it never goes for the prevailing culture of the local industry rather it establishes its own distinctive culture in the society and especially in the corporate sector [Elk09]. Conclusion Wal-Mart is the world market leader in the retail industry. It solely operates on the basis of retail internationalization by utilizing all of its core components and variables. The company is now functioning in almost all the major countries of the world which has enabled it to generate revenue of more than $370 billion. Wal-Mart has the success history of internationalization and until now it has proved to be a blessing for its customers all over the world. It is the largest retail store which is giving the advantage of purchasing the low price commodities of best quality. In addition to this it has been extending job opportunities to the members of the foreign society in which it is operating which ultimately results in its success and long term sustenance. References And08: , (Harrison, 2008), Daw06: , (Dawson, 2006), Nei04: , (Coe, 2004), Fra09: , (GANDOLFI, 2009), Gar09: , (Gary Gereffi, 2009), Con07: , (Kampf, 2007), Yos04: , (Sheffi, 2004), Sch03: , (R, 2003), Hic07: , (M, 2007), Placeholder1: , (Wal-Mart, 2007), Lic06: , (N, 2006), Elk09: , (Elke Pioch, 2009), Read More