Essay on What Are the Sources and Limits of Mnc Power

Words: 1608
Pages: 7
Open Document
What are the sources and limits of MNC power?
Multinational Corporations in a Global Economy
IR 120 - 201136597 - Catharina Knobloch

1. Introduction

As MNCs are getting increasingly important as actors in political bargaining, the purpose of this essay is to provide a (more or less) detailed overview over the sources and limits of the power of multinational corporations (MNCs).
In the first section, I am going to lead into this topic by giving some definitions. In addition to that, I am also going to explain the role of MNCs in the international governance based on the typology of regime types. Then I am going to examine the most important sources and forms of business power, before taking into account the limits and the …show more content…
Sources of Power

It is undisputed that MNCs are powerful political actors in the globalising world. Their growing importance in world system puts limits on state control over domestic economy. Nevertheless, the sources of this power are not always obvious because of the intransparent structure of global politics. I want to concentrate on three of the most unchallenged sources/forms of business power for this reason. Firstly, one source of MNC power is their size. They can benefit from substantial economies of scale/scope, so they do not face too much competition. As a result, they operate in oligopolistic markets. For this reason one could assume that states or international organisations should intervene because a market that is dominated by an MNC is not Pareto efficient and therefore social welfare costs might arise as a consequence. Furthermore, the entry of MNCs in a foreign market can lead to a higher efficiency in the host market, because the domestic firms in that market have to react to increase their competitiveness of their operations. In the end an overall efficiency is improved and the host country will certainly benefit from the entry of the MNC. Therefore the great powers (home of most of the multinationals) are in favour of seeing the MNCs being very powerful and so the multinationals have a strong lobby as well. Another important source of MNC power is that they achieve competitive advantage and grow on the basis of their capabilities and reach
Show More

Related Documents: Essay on What Are the Sources and Limits of Mnc Power

International Employment Standards

Nowadays, ‘International Employment standards’ is what international companies and organisations looking for, which is also a major premise in the globalising world. According to the International Labour Organisation (ILO), it proposes and provides a code of conduct for the labour standards such as protect the childcare, guarantee safe condition, workers’ right and non-discrimination employment to be minimum labour standards for international organisations, governments and Multinational Corporation…

Words 1375 - Pages 6

Globalisation: International Trade and Foreign Direct Investment Essay

Please be aware that by submitting your work through ‘Turn it In’ you are agreeing to the following statement: I declare that the work submitted for assessment contains no section copied in whole or in part from any other source unless it is explicitly identified by means of quotation marks and that I have acknowledged such quotations by providing detailed references in the approved format. I understand that either or both unidentified and unreferenced copying constitutes plagiarism which is considered…

Words 2860 - Pages 12

Market Threats Essay

multinational companies are willing to invest in Africa in general and West Africa in particular. So, it might be helpful to look for what kind of political risks firms may face in West Africa? West Africa’s problem is that, African countries are not investors' nations; they rarely invest in other countries. However, all of them are host countries. It is necessary to focus on what investors should do to avoid African government-induced political risks, and how those countries can behave to preserve a safe…

Words 6047 - Pages 25

mgmt2101 final exam notes Essay

whether a country is transnational or not? Amount of foreign and national capitol, production and employment 11. How has world output and world trade changed? 1960: US: 40 % of world economic activity; 2008: 20%; 2020: 60% from developing countries 12. What does globalization mean for…

Words 8745 - Pages 35

Final Exam Notes Essay

goods and services. Refers to the growth in direct foreign investment in regions across the world Reflects the shift toward increasing economics interdependence; the process of generating one, single, world economics system or a global economy. Sources encouraging global business activity: Push factors (reasons businesses would gain from entering an international context). Pull factors (forces that act upon all businesses to create an environment where competing successfully means competing globally)…

Words 7905 - Pages 32

Essay about Organizational Theory on Apple Inc.

1.Introduction Power is a measurement of an actor’s ability to influence the behavior, thoughts or activities of another actor (eds Ott, Parkes & Simpson 2008). Authority, power that is legitimized by the legal and cultural foundations on which an organization is based, is the ultimate source of power in a organization (Gareth R. Jones 2001). Whenever there is a use of authoritative control it creates resistance and obedience. In this essay, power and the limit of power (obedience and resistance)…

Words 2624 - Pages 11

International Business Environment Challenges and Changes Essay

Research Journal of Management Sciences _____________________________________________ISSN 2319–1171 Vol. 2(11), 34-38, November (2013) Res. J. Management Sci. International Business Environment: Challenges and Changes Gupta Abhishek Administrative-cum-Accounts Officer & Head of Office, Sardar Swaran Singh National Institute of Renewable Energy Ministry of New and Renewable Energy, Govt. of India, Wadala Kalan, Kapurthala, Punjab, INDIA Available online at: www.isca.in, www.isca.me Received 3rd…

Words 4229 - Pages 17

Business Ethics and Corporate Governance Essay

Corporate Governance: The international journal of business in society Managing legitimacy issues in global supply chains: the case of the athletic footwear industry André Nijhof Dai Forterre Ronald Jeurissen Article information: To cite this document: André Nijhof Dai Forterre Ronald Jeurissen, (2008),"Managing legitimacy issues in global supply chains: the case of the athletic footwear industry", Corporate Governance: The international journal of business in society, Vol. 8 Iss 4 pp. 506 - 517…

Words 7850 - Pages 32

The Quest For The Fortune At The Bottom Of The Pyramid: Potential And Challenges

The quest for the fortune at the bottom of the pyramid: potential and challenges Dennis A. Pitta The University of Baltimore, Baltimore, Maryland, USA, and Rodrigo Guesalaga and Pablo Marshall ´ Pontificia Universidad Catolica de Chile, Santiago, Chile Abstract Purpose – The purpose of this article is to examine the bottom of the pyramid (BOP) proposition, where private companies can both be profitable and help alleviate poverty by attending low-income consumers. Design/methodology/approach…

Words 9069 - Pages 37

“Role of Fdi & Fii in Indian Economic Growth” Essay

Actually, hundreds of MNCs have de-listed from the stock market in the last decade by converting to unlisted subsidiaries of foreign parents. An analysis of this alone will give a clue to the nature of the capital market due to foreign investment in our economy. MNC does not even bring funding from outside sources since it can access funds in the domestic market by showing "comfort letters" from its parent company. There…

Words 10228 - Pages 41