Transnational Corporations
What are Transnational Corporations?
What is a Transnational Corporation?
Transnational Corporations are ones that operate in more than one country at a time. They are also called multinational corporations.
Transnational corporations have their headquarters in one country and operates partially or sometimes fully in secondary stores and offices in one or more other countries. The growth in the number and size of transnational corporations has been controversial ever since the 1950's due to their economic and political power as well as their mobility. Some examples of transnational corporations are: Coca Cola, Nike, McDonald's and many many more.
Benefits of Transnational Corporations
Size of Corporations
The scale and size of transnational corporations are what give them the chance of benefiting economically. Just like industries that carry high fixed costs such as car manufacturers and airlines, the size and scale gives them the ability to benefit from economies of scale. This enables them to have lower average cost and hence lower prices for consumers.
Jobs And Wealth
Transnational Corporations create jobs and wealth around the world, and help raise expectations of what's possible. The inward investment made by Transnational corporations offer much needed foreign currency for the developing economies.
Minimum Standards
Transnationals also ensure minimum standards. The success of transnationals is often because consumers prefer to buy goods and services in which they can rely on for minimum standards. For example, if you visit a country, you would know that a Starbucks coffee shop will offer you something that you are already familiar with. Though it may not be the best thing you can find in that certain area, it will also not be the worst, which gives you security and you know what to expect.
Profits
Large profits made by Transnational corporations are used for development and research. For example, oil exploration is costly and risky; this could only be undertaken by a large firm with a significant amount of profit along with resources. This is seen to be similar among drug manufacturers.
Disadvantages of Transnational Corporations
Market Dominance
The market dominance of transnational corporations make it harder for smaller local firms to thrive economically. In developing economies, transnationals are using the economies of scale to push these local firms out of business. The larger supermarkets and corporations take out
notable margin of the local corner stores, which then leads to fewer diversity in corporations.
Consumer’s Expenses
Transnational Corporations are also usually interested only at the consumer's expense. They have monopoly power which further enables them to make excess profit. One example of this is that Shell (an oil and gas company) made profits of 14bn pounds the very last year.
Slave Labour
Transnational Corporations are participating in slave labour where workers are paid with very small wages and not treated respectably.
Environment Threat
Lastly, these transnational corporations contribute to pollution for the sake of profit. They overuse non-renewable energy resources, which is putting the environment under threat.
Opinion-
I believe that it is important that Transnationals begin to regulate the amount of pollution they produce as government regulation has seemed to fail. However, on the positive side, although Transnational Corporations may pay low wages by the Western Standard, this is arguable better than the alternative of having no job at all. I believe that Transnationals have been able to spread globalization. Thanks to the intelligent investments that these corporations have made, some of them become huge and this means they can earn more money to support their countries economies. Transnationals have also helped to spread globalization through the use of advertising which I think is quite a smart technique. This world as we know it basically brainwashed by the media which makes advertising much easier. Advertising is an extremely significant and effective way to spread transnational corporations ideas, concepts and stocks all across the world. Withholding our instincts towards the poor is also an important part of this whole industry, as people tend to accuse firms for selling inappropriate products to them. Some analysts have suggested that the governments of developing countries should make a rule that Transnational should only be selling second or third rate quality products to those countries and honestly I don't see a valid reason in this. Being poor should not make one's choice of products less moral or defensible than the choice of the rich. As the consumers' demand, the same products might have been imported anyways had they not been made by the Transnational Corporations. On the other hand, without a sufficient demand for products Transnationals would not even be able to make profits from selling them to these developing countries. It is no surprise that the people who are living in developing countries whose government have been more open to transnational corporations are also the ones that are experiencing significant improvements in their standards of living while other countries who remain hostile to these firms are continuing in poverty. Of course it is not the original intent of these governments to perpetuate poverty (for the most part) but they are doing so and using the excuse that they are protecting their people from alleged exploitation by Transnationals when they are exploiting their people themselves. This has very little moral justification and is a fraud.