IPC2602 Assignment 1
THE RISE in MNCs
Table of Content
1. Introduction…………………………………………………………………...…....2
2. Introduction ………………………………………………………………………..3
3. The dominance of large MNCs……………………………...............................3
4. The accumulation of wealth……………………………………………………....4
5. The division between the rich and poor……...................................................4
6. The division of labor and multi-centered production.......................................5
7. The increased influence of the MNCs…………...............………….………….5
8. The increased influence of the MNCs…………...............………….….………6
9. Effects of Covid-19 pandemic on MNCs……………….………….……………6
10. Conclusion………………………………………………………………………….7
11. Reference list………………………………………………………………….……8
12. Reference list ………………………………………………………………………9
1
, IPC2602 Assignment 1
Introduction.
Firms have taken their businesses to the international level where they have exposure
to more resources, markets and customers. The internationalisation of business has
caused various trends to emerge. This paper will discuss the trends in the rise of
multinational corporations.
Transnational coordination of production has arisen due to the rise of multinational
corporations (Jstor.org, 2021). At the international level, there exists coordination of
sales-marketing decisions and production decisions. Operations and processes at the
global level are usually managed by the parent company since all the firms are
integrated. The firms at the global level owe their allegiance only to their parent
company and not any other country. Labour at the international level is also coordinated
(Jstor.org, 2021). The number of employees and staff to be hired for various operations
is decided by the parent company. Decision-making is centralized and no firm at the
global level is able to make decisions on their own.
Government coordination has boosted the operation of firms in several countries
(Jstor.org, 2021). Firms located in foreign nations are a source of revenue to the nation
through payment of taxes. With respect to that, governments provide suitable business
environments for foreign firms by removing barriers and restrictions, allowing for smooth
business operations. The foreign firms also create employment for the locals, thus
uplifting their living standards and as a result, enhancing their GDP.
According to Kok et al (2020: 57), Gilpin (1987:231), defines Multinational Corporations
as "a firm that owns and manages economic units in two or more counties." This means
that a company has many stores or offices in different countries but their head office is
located in one specific country. Kok et al (2020: 57), goes on to say that Smith et al
(2011:72) called the rise of the multinational companies corporate globalisation, he went
on to say that "ownership and control of the economic activity has increasingly moved
away from government control and into the hands of a relatively small group of parent
2
THE RISE in MNCs
Table of Content
1. Introduction…………………………………………………………………...…....2
2. Introduction ………………………………………………………………………..3
3. The dominance of large MNCs……………………………...............................3
4. The accumulation of wealth……………………………………………………....4
5. The division between the rich and poor……...................................................4
6. The division of labor and multi-centered production.......................................5
7. The increased influence of the MNCs…………...............………….………….5
8. The increased influence of the MNCs…………...............………….….………6
9. Effects of Covid-19 pandemic on MNCs……………….………….……………6
10. Conclusion………………………………………………………………………….7
11. Reference list………………………………………………………………….……8
12. Reference list ………………………………………………………………………9
1
, IPC2602 Assignment 1
Introduction.
Firms have taken their businesses to the international level where they have exposure
to more resources, markets and customers. The internationalisation of business has
caused various trends to emerge. This paper will discuss the trends in the rise of
multinational corporations.
Transnational coordination of production has arisen due to the rise of multinational
corporations (Jstor.org, 2021). At the international level, there exists coordination of
sales-marketing decisions and production decisions. Operations and processes at the
global level are usually managed by the parent company since all the firms are
integrated. The firms at the global level owe their allegiance only to their parent
company and not any other country. Labour at the international level is also coordinated
(Jstor.org, 2021). The number of employees and staff to be hired for various operations
is decided by the parent company. Decision-making is centralized and no firm at the
global level is able to make decisions on their own.
Government coordination has boosted the operation of firms in several countries
(Jstor.org, 2021). Firms located in foreign nations are a source of revenue to the nation
through payment of taxes. With respect to that, governments provide suitable business
environments for foreign firms by removing barriers and restrictions, allowing for smooth
business operations. The foreign firms also create employment for the locals, thus
uplifting their living standards and as a result, enhancing their GDP.
According to Kok et al (2020: 57), Gilpin (1987:231), defines Multinational Corporations
as "a firm that owns and manages economic units in two or more counties." This means
that a company has many stores or offices in different countries but their head office is
located in one specific country. Kok et al (2020: 57), goes on to say that Smith et al
(2011:72) called the rise of the multinational companies corporate globalisation, he went
on to say that "ownership and control of the economic activity has increasingly moved
away from government control and into the hands of a relatively small group of parent
2
