ENVIRONMENTAL FACTORS AFFECTING MULTINATIONAL COMPANIES
By Dabbyson Al. Zimba
It is an undeniable fact that the successes of every business’ endeavors are all dependent upon the ‘Environment’ in which the company is standing. It is said that “there is nothing like foreign environment in conducting business. It is just as good as conducting business in the home environment.” To our surprise, that statement has contradictions on its own. Be it a small, or complex, immature or mature or rather a professional-level business_ differences exist when it comes to comparing business conducted in foreign environment from that of a home environment. This research seeks to extend our thorough understanding of congruence of Multinational Companies which are usually abbreviated as (MNCs). The team will bring out valid and thorough traits of multinational companies. Furthermore, it seeks to repudiate the prescribed phrase, “there is nothing like foreign environment in conducting business. It’s just the same as conducting business in the home environment.” In simpler terms, we disagree to the statement.
To succeed in every business, you ought to have a persuasive and strategic plan encompassing all the opportunities and threats and other forces that might affect operations of the business. These forces that affect the business can be wholly termed as business environment. By definition, others have defined business environment as different forces or surrounding that affect the business operations. It can be argued that companies and organizations operate by focusing on both the internal and external environment the former is mainly associated with workers or employee relations and the latter is associated with the economy, political, social/cultural and technological factors in the area that the company operates. On the same token, the forces that affect the operations of the business in the home country is what is referred to as the ‘home environment’ as the company grows and expands it might as well expand its operations to other countries. According to Drucker (1974) he asserts that multinational companies grow as a result of emergence of a genuine world’s market demand transcending national cultural and ideological boundaries due to the information explosion. When this happens and the business begins to operate in another country, it ought to abide by the legal, political policies and all other forces that will affect the business in the country and these new forces are what we refer to as the ‘foreign environment’ as every country provides different regulations and/or policies that the business has to comply with. Thus, this research will seek to outline some difference in environmental forces which exist, and it should be noted that depending on the nature of the forces, the impact inflicted on the business can either be positive or negative.
Many authorities, scholars and authors have vividly defined Multinational Companies from different perspectives. Some of these vivid definitions are meticulously outlined below. Research Machines (2004) asserts that there are four (4) definitions to MNCs. Firstly; it defines a MNC as a corporation that has its facilities and assets in at least one country other than its home country. It further defines it as that which has offices and/or factories in various countries and usually has a centralized head office where they coordinate business enterprise with manufacturing, sales or service subsidiaries in one or more foreign countries, also known as Transitional or International Corporation (TN or INC). Moreover, the third definition as postulated by Research Machines as it sees MNC as outlined by Research Machines (2004) identify that Multinational companies operate outside its own home country. The Encyclopedia of Management...
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