Benefits and Challenges of Multinational Companies (MNCs)

Multinational companies (MNCs) are not exempt from benefits, which can be for the government, the economy and the people or even for themselves. Cole (1996) stated that the size of a multinational organization is enormous; many of them have total sales well above the GND of many of the world’s nations. Cole also stated that World Bank statistics comparing multinational corporations and national GNPs show, for example, that big oil companies like Exxon and Shell are big in economic terms, that nations like South Africa, Australia, and Argentina are substantially larger than nations as as Greece, Bulgaria and Egypt.

Other large multinational companies include General Motors, British Petroleum, Ford, and International Business Machine (IBM). Some of the benefits of multinational companies are:

1. There is usually a large investment of capital in the main economic activities.

2. The country enjoys varieties of products, services and facilities, brought to its doors

3. There is creation of more jobs for the population

4. The nation’s skill set is best utilized and used effectively and efficiently.

5. There are advances in technology as these companies incorporate cutting-edge technology into their businesses.

6. The demand for training and recycling and progress in the education of the people is absolutely necessary. This in turn will help strengthen the nation’s economy.

7. People’s standard of living rises.

8. Friendship between nations in trade, that is, it strengthens the international relationship

9. The balance of payments of nations in trade improves in

In the words of Cole (1996), he asserted that the size (and wealth) of multinationals means that they can have a significant effect on the host country. For Cole, most of the effects are beneficial and include some or all of the above. The Electronic Library of Scientific Literature (1996) explained the benefits of multinationals under a theory known as ‘The Theory of Externalities’. The theory considers the benefits of multinationals from the point of view of those who maintain the importance of Foreign Direct Investment (FDI) as part of the necessary engine for growth. In Davies’ contribution (1989), he gave some theories about the benefits/advantages of multinationals. Davies (1989: 260) labeled this ‘Economic Theory’ and multinational where he took a comprehensive and critical look at the benefits of MNCs.

More benefits came along with the theories of these people and some are:

1. There is a significant injection into the local economy with respect to investment

2. Better use of the country’s natural resources

3. They help strengthen internal competition

4. They are a good source of technological knowledge

5. Market expansion in the host country

PROBLEMS/CHALLENGES FACING MULTINATIONAL COMPANIES

There is no company without problems that it faces. Whether an organization is large or small, there is bound to be some type of problem or negative factor/influence working against its survival or continuity. Weihrich and Koontz (1994) state that the operation of multinational companies must be weighed against environmental challenges and most of the challenges faced by multinational companies are:

1. There is usually an acute shortage of labor: people with a lack of managerial and technical skills

2. The challenge of the hostile business environment

3. Usually, there is the problem of conflict of interest between the three parties: the government, the multinational and the general public.

4. There can be a huge labor cost in the host country, at least to bring expatriate managers from home country or elsewhere

In conclusion, the authors mentioned above have given a comprehensive and comprehensive note on the benefits of MNCs for the host country where they operate and also highlighted the benefits derived for the host country MNCs themselves. Also, despite the challenges and problems these multinational companies face, they are still surviving and going strong.