The influence of political and legal challenges facing mnc
by jigar12345 on Nov 16, 2011
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The Influence of political and legal challenges facing MNC ...
The Influence of political and legal challenges facing MNC
A Multinational Corporation is an enterprise that delivers services or production in more than one country. There are two models of Multinational Corporation. The first model of a multinational corporation is the one with an established headquarter that is based in one nation while some other facilities are based in locations in other countries. This type of a model allows the company to take advantage of benefits of incorporating in a given locality while at the same time they are able to produce goods and services in areas where the cost of production is lower. Multinational Corporations have risen as one source of foreign direct Investment in the major industrialized nations (Spero & Hart, 1997). The second model of a multinational corporation is a case whereby there is a parent company in one nation and subsidiaries in other countries around the world. With this model all the functions of the parent are based in the country of origin the subsidiaries more or less function independently. Multinational corporations have a powerful influence in international relations and local economies they play an important role in globalization. Multinational Corporations have grown in power a visibility but they have also been viewed more differently with both governments and consumers worldwide (Alan & Alain, 2008).
In addition, multinational corporations often access new markets by creating joint ventures with existing firms operating in the markets. In joint ventures, the venture partner in the market to be entered remains with a considerable share or even complete autonomy. The establishment of joint ventures has most of the time proved unsuccessful in the long run for multinational corporations, which are likely to find their venture partners have tough competitors when a more direct entrant of the new market is attempted. Multinational corporations are thus able to succeed on new markets in a number of ways which allows existing concerns in the market to be accessed with a varying degree of autonomy and control over operations. Because of the enormous size of MNC’s they enjoy massive economic, legal and political power which enables them to dictate the markets (Stopford, 1998). This research paper digs deep into identifying the political and legal challenges that have hit the Multinational Corporation. It also discusses various theories of MNC’s and how they have impacted in existing corporations.
Politics and power within MNC
While there are no doubts about the economic success and pervasiveness of multinational corporations, their motives and actions have been called into question by social welfare, environmental protection, labor organizations and government agencies worldwide. Due to these conflicts, there has arose numerous concerns about the influence of politics and legal constrains that should be met. Multinational companies are faced with vario
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