Term Paper on "Motivations of Multi-National Companies. Those Two Major"

Term Paper 4 pages (1789 words) Sources: 4 Style: MLA

[EXCERPT] . . . .

motivations of multi-national companies. Those two major multi-tactics would include sales/operations in multiple countries and the positioning of manufacturing/delivery in foreign countries. The former focuses on expanding sales and business in other countries while the other focuses on centering manufacturing and delivery in those countries as a means to save money vs. manufacturing and transporting the goods domestically. Obviously, if selling of manufacturing goods in a foreign country allows a firm to realize financial benefits of any sort, then it can easily be justified in most cases while not being able to sell more money is obviously reason to not do it, more often than not. Most of any changes surrounding efficiency, costs, revenues and the like are based on the concept of global competitiveness. More will be said on this shortly.

In terms of economies of scale, and as inferred through much of this answer (both before and after this part), Wal-Mart realizes great advantage from being as large as they are and from being multi-national. If they were much smaller and domestic-only to one country or if they were not multi-national (regardless of size), they would not realize the benefits of being one or both. No matter how large a firm is, they cannot realize the benefits reaped by firms like Wal-Mart because of the reduction in costs and maximization in profit that can be rendered from using foreign tax laws and lower foreign costs in manufacturing and/or transporting goods to points of sale.

Coming back to economies of scale after it has now been clearly defined, a good example of economies of scale and how this topic relates to global competitiveness can now be made. It is safe to say that the bulk of goods from both Target and Wal-Mart come from overseas sources. Regardless of the intentions, if Wal-Mart got more goods domestically than from foreign sources and/or did not take advantage of foreign tax tactics or efficiencies, there is little to no doubt Target would NOT do the same thing and thus would gain an advantage. In other words, Wal-Mart has to do it because that is the norm for the industry and Wal-Mart will lose out greatly if they do not keep up with other companies. However, it is not just the source of goods that matter.

There is also the consideration of where revenues are coming from, how efficiently goods are transported and bought, the cost of said goods, etc. For example, if identical goods to be sold in the United States are available in both Mexico and China, it would generally make more sense to buy from Mexico all else equal because Mexico is right by the United States. However, if the good is cheaper in China and it can be transported to store shelves at a lesser price with the same revenue, then the profit margin would be greater.

As noted above, the areas and departments in which benefits of multi-national operations can arise are noted above, although one in particular is not noted above. For example, a firm that operates mostly or largely in the United States may be inclined to position their operations in such a way to minimize or negate tax burdens in the United States for certain tax burdens thus making it much more lucrative from a tax standpoint to operate in whole or in part overseas. Other areas including manufacturing costs (mostly benefited from lower labor rates), supply chain and other logistical benefits of manufacturing overseas are the clear benefits of operating in whole or in part in foreign countries.

An example of a multi-national company that operates internationally to their substantial benefit is Wal-Mart. As noted above, the benefits for Wal-Mart cut both ways. They operate in foreign countries around the world. However, they also import a ton of goods from China and other countries into their United States and other core markets because the goods are much cheaper than if they were made in the United States or other countries where cost of labor and/or goods is much higher. At least in the current context, it's a win-win. There is a lot of chatter about how Wal-Mart should be using more domestic goods for United States sales, but the increase in price points that would be necessitated by such a move would be something that most buyers would refuse to stomach on one level or another.

As another example, since the goods in China are a lot cheaper, they can be bought in bulk and sold at a smaller profit margin than a company that buys in smaller bites and/or only gets goods domestically. As such, smaller corporations and "mom and pop" shops do not have any real ability to compete. Another example would be Wal-Mart using its international force to pay less taxes via keeping money out of higher tax areas like the United States. Of course, they must pay a litany of taxes on goods imported and sold here but any activity that does not occur in the United States in any manner or form does not have to pay taxes on that money (most of the time) and this fact can be used by a MNC to their great advantage.

Question 3

The dual mandate/objectives of monetary policy focus on maximization of employment and price stability. If it is clear that prices and/or employment are fluctuating wildly, then the Fed will generally step in. As a few examples, quantitative easing has been used by the Fed several times as well as sharp reduction in interest rates just in the last 4-5 years. The current economic setting in the United States is not dire but it's not great either. As such, interest rates as set by the Fed are quite low. Concurrently, the rates charged to most consumers to buy cars and homes (the latter in particular) are in many cases historically low as compared to rates over the last 3-4 generations. Similarly, an in-flux of cash into the United States economy can have a bearing on things like inflation and the propensity of people and firms to spend cash. Examples of this in play are stimulus checks and even tax rate reductions.

The author of this response will address the "uncontrollable" aspect of monetary and fiscal policy at the same time as how monetary policy transmits to the economy. First, there is often a time delay between the point in which a policy is started and when it takes effect. The cause/effect time frame is rarely immediately. Also, the effects are sometimes more muted to missing as compared to what is expected. For example, the record-low interest rates and other monetary policy of the Fed was expected to have much more wider effects but many companies are hiring and otherwise spending money at a very tepid pace as if they are waiting for conditions to just magically improve and the problem is that all of the private market forces that could effect change through their investments and hiring are all doing this at the same time. Similarly, the government has largely expended most everything in their bag of tricks, including the lowering of interest rates and infusing cash through things like quantitative easing and the like, and the economy (while not contracting) is not doing much in the other direction either.

A good example industry is retail. There are staple items that retail will always sell, even if the revenue is modest, whether times are good or bad. This includes food, clothes, gas, etc. And other things that are not optional even when times are bad. However, what will also happen is that any sort of discretionary spending will be low to non-existent which means less snacks, cheaper types of clothes and anything that is completely discretionary such as new cars, more expensive brand names in general and so forth will be lesser to non-existent depending on the well-being (perceived or actual) of the buyers or the economy as a whole. Even buyers that themselves have good resources will keep the purse strings tight if they think the greater economy is weak and thus subject to fold and contract and this is especially true if a person thinks such a contraction will impact them direction. To come back to retail, they get bitten by these oscillations because they don't make their money on the staple…it's usually the discretionary purchases that make them a lot of cash.

Question 4

A moral hazard is a situation where there is a risk but the person taking said risk will not tend to feel the aftermath or effects if the risk goes wrong. For example, a person betting, in any form, on the collapse of the housing market that occurred in the United States from 2007 to 2009 would be an example of someone that would either not be hurt or would specifically gain from that prediction coming to pass yet many people would feel poor effects of that same event happening, including… READ MORE

How to Reference "Motivations of Multi-National Companies. Those Two Major" Term Paper in a Bibliography

Related Term Papers:

Leadership in Organizations Organizational Leadership Thoughts Capstone Project

Leadership in Organizations

Organizational Leadership

Thoughts on Leadership (Opening statement)

Management verses Leadership

What is management?

Similarities

Differences

The overlap ion management and leadership

What do leaders do?

Comparing personal… read more

Capstone Project 40 pages (12322 words) Sources: 25 Topic: Leadership / Mentoring

---

Second Language Learning Motivations of Non-Heritage Chinese Research Proposal

Second Language Learning Motivations of Non-Heritage Chinese Learners in University Credit Courses

The 21st century has been dubbed the "Century of Asia" with China leading the way. Moreover, the number… read more

Research Proposal 24 pages (9074 words) Sources: 20 Topic: Education / Teaching / Learning

---

Why Teleworking Works for Today's Workforce Term Paper

Teleworking

Telecommuting's emergence as a reciprocal strategy for retaining valuable workers while reducing the costs of operating an enterprise is yielding an entirely set of anticipated benefits for businesses, and… read more

Term Paper 30 pages (8075 words) Sources: 6 Style: APA Topic: Career / Labor / Human Resources

---

Managing Organizational Culture Dissertation

opportunity exists for the company to expand internationally by setting up operations in the emerging economies of China and India. The question to consider is how to build cultural harmony… read more

Dissertation 34 pages (12420 words) Sources: 1+ Style: Harvard Topic: Management / Organizations

---

Culturally Relative Ethics vs. Objective Ethics First Essay

Culturally Relative Ethics vs. Objective Ethics

First, it is necessary to address the underlying concept about whether or not moral principles exist in any objective sense or only as function… read more

Essay 7 pages (1858 words) Sources: 1+ Topic: Law / Legal / Jurisprudence

---

View 100+ more related papers  >>