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Multinational and Global Strategy

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Global forces are identified as of three types namely market, government, cost and competitive. These are considered as the factors which can push a firm to go global. Going global has many advantages as well as disadvantages. An organization is likely to benefit from wide market and as a result may expand its production since it will be serving a wider market. At the present times, depending on nation in question, the government does give incentives for local firms to go global. Going global is likely to benefit the through the revenues which will be accrued from the firms which would have globalized.

Costs of going global are relatively low as compared to the benefits accrued. Other from the firm being globalized, there are third parties who are also likely to gain some benefits. This comes about from the point of competition which is created at the market level. This competition in most cases leads to better goods being manufactured at competitive prices. This leads to better goods being brought from the market at the competitive prices.

It is totally true that the global cost pressures cannot be ignored when strategizing on the multinational issues. It is not possible either to completely ignore and neglect the local and become purely global in today’s world. Multinational strategies have got the effect of trickling down benefits to the level of the local communities. To start with, many multinational investors borrow money locally at favorable interest rates and thus finance their projects. This constitutes unfair competition with local firms and crowds the domestic private sector out of the credit markets, displacing its investment in the process. Many multinational organizations are net consumers of savings, draining the local pool and leaving other entrepreneurs at economical positions which are unfavorable. Foreign banks tend to collude in this reallocation of financial wherewithal by exclusively catering to the needs of the less risky segments of the business scene.

Another issue is that foreign owned projects are capital intensive and labor-efficient. They invest in machinery and not wages. Skilled workers get paid well above all the local norm, all others languish. The natives rarely benefit and when they acquire employment it is short lived and unfairly paid. In Transnational firms, key activities and resources are neither centralized at headquarters nor decentralized so that each subsidiary can act independently for local needs (Tickoo, 2008).

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