The multinational corporations are around us. We go to them every day, and every day we go, we give them more power. All of them are controlling the world, and that make us ask: What is the real power of this corporations? But to know that, we need to know: What is an multinational corporation. According to the Business Dictionary a multinational corporation is: “An enterprise operating in several countries but managed from one (home) country. Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation.” Means that a company of one country who have establishments in other countries, is a multinational corporation. But, how this this corporations began? One of the pioneers of this is Singer Corporation, was one of the first to be multinational.
Singer Corporation was founded in 1851 at Boston and move two years later to New York. They sewing machine was so revolutionary that they wins also fairs in Europe, that was a little step of the legacy of this company. The fame in Europe make that the company establish another factory in United Kingdom. Also a sewing machine helped the government to have best perform when they need uniforms to the militia, one of the factors to the success of the company. Almost in a way they use the crisis to their advantage to generate employees and grow like a company.In the present exist many multinational corporations, who in a implicit way control the world, like Apple, Microsoft, Coca-Cola, McDonald’s, etc. All of them are a strong factor in the economy of a country. Those corporations earns a avarage of 173 billion dollars, 86 billion dollars, 43 billion dollars, 25 billion dollars, respectively.
That is more than many government around the world. We are talking about amounts of money that can manage a country. Their domain in the world economy are vital to make money move around it.
And if you add more corporations to that list, the economy have effects, positives and negatives.The society must consider the effects of the multinational corporations because not only is positive. Like almost everything, multinational corporations have positive and negative effects. Some positives or pros of multinational corporations are the efficiency and lower prices.
Being a huge corporation, all the components (staff, merchandise, and branch) are in great scale that make more efficient and the prices are lowest. Other pro is more research and development, leading to improved products. Having a big name many products of a great quality will want to be sold in your corporation. And another two are: create jobs and wealth around the world and success a reflection they meet consumer preferences. The jobs are one of the most important effect that the people see, because the people need to work to live and they can take the time to meet the customer preference with questionnaires.Now we will see the other face of the quarter, the negative effects.
There are five top negative effects of multinational corporations, and are: scope for tax avoidance and lost tax revenue, monopoly power leads to higher prices for consumers, monpsony power in setting lower wages, often have had negative impact on environment and cultural homogenization as local firms struggle to compete. The first is one of the most controversial in this topic, the evasion of taxes can hurt the local economy and the government. Once they eliminate the competition they can have a monopoly and they will increase the prices because they are alone.
The salary will be affected too, they will pay the minimum salary to they employees and that because they have many employees and need to save money the more possible. Sometimes the contamination is imminent and they have such power that many laws are useless against they. The local firms no have chance to compete with them and the corporations they advantage of that. Also the corporations can change countries culture. For example, Adidas can change the form to dress of the country where it is established.Stop the multinational corporation alone is impossible.
The only way can be using the government in your favor, but the power of the corporation make them “untouchable”. This is a problem that we will have to confront and always in a way or another support local firms because without competition will be a bigger problem.