benefits of International companies
International companies can provide foreign countries with many benefits. However, foreign governments are not always fully open to giving them free rein over available opportunities. They will always seek to limit these institutions if not downright sabotage them in favor of local ones or whatever current political environment prevails.
Countries’ governments continue to put the interest of their populations first hence do their best to avoid any export of profits. Large multinational companies are likely to repatriate profits back to their’ home country”, leaving little financial benefits for the host country. They will always aim to reduce their tax liability to a minimum, leaving the host government at a loss of tax revenue.
To some governments, local culture is significant, and several foreign businesses can dilute local customs and traditional cultures. For example, the sociologist George Ritzer coined the term ‘‘McDonaldization’‘ to describe the process by which more and more sectors of American society as well as of the rest of the world take on the characteristics of a fast-food restaurant, such as increasing standardization and the movement away from traditional business approaches.
Multinationals have been accused of cutting corners on health and safety in countries where regulation and laws are not as rigorous. The creation of the commonly known as ”sweatshops” in many third world countries exploits endangers locals making able countries enforce strict regulations that are sometimes limiting to the said companies.
Depending on the amount of investment a company has, it threatens the sovereignty and independence of the host country. The Wal-Mart/Massmart merger has caused concern about its possible influence on the South African economy, employment, and autonomy.
It is, therefore, imperative for any international company to offer benefits that outweigh the host government’s reasons to undercut them to gain a foothold and operate while competing successfully with the local companies.
References
B Berkey – Journal of Business Ethics, 2019 – Springer
K John – Financial Management, 1991 – JSTOR
Schnitzer Monika – Economica Vol. 69, No. 273 (2002)