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Improved economics are a global phenomenon. Is this good or bad for global corporations? ...[Show More]

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The evolution of the global economy could have positive or negative consequences on multinational corporations depending on various factors. Global corporations can benefit from growing consumer demand and spending power through improved economic conditions in many countries. This might boost sales and revenue for companies operating in these regions, ultimately translating into improved profitability and expansion prospects (Kong & Zhang, 2019).

However, as countries with high economic growth tend to be more appealing to international investors, better economic conditions can also generate chances for multinational firms to extend their operations and invest in new areas (Kwon, 2019). This may result in more employment, more commerce, and better infrastructure, all of which may improve the general business climate for multinational businesses.

Conversely, more robust economic conditions can also pose difficulties for multinational firms, particularly in light of heightened rivalry. Companies may find it increasingly challenging to maintain their market share and profitability as additional businesses enter the market, particularly if they lack a significant competitive edge or a well-known brand (Kong & Zhang, 2019).

Furthermore, as they expand their activities into new markets, multinational firms could encounter difficulties with regulatory compliance and geopolitical threats. These dangers can impact a company's capacity to operate and expand in a specific region, including shifting governmental policies, trade restrictions, and geopolitical tensions (Kwon, 2019). It is ultimately up to each organization to analyze the benefits and drawbacks of conducting business in various regions and to adjust its business plans in light of those findings, even though stronger economies may bring possibilities as well as challenges for multinational corporations.

References

Kong, D., & Zhang, H. (2019). How does economic growth affect the performance of global firms? Evidence from a dynamic panel model. Journal of Business Research, 100, 409-417.

Kwon, Y. (2019). Global corporations and national economies: A literature review on the impact of foreign direct investment. Journal of International Trade and Commerce, 15(4), 21-40.

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Impact of Improved Economics on Global Corporations  

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Impact of Improved Economics on Global Corporations

Improving economies is the ultimate aspiration of all people and governments alike globally. Improving economics translates to economic growth and development. It also leads to the social development of people worldwide and prosperity for corporations that engage in business. The lifeline for corporations is primarily inclined to the level of global economic health (Cooley & Prescott, 2020). Hence, improved economics has a good and a destructive impact, as it shall be justified hereunder.

To a more significant extent, improved economics are suitable for corporations in that;

Economic growth leads to improved purchasing power among consumers, which benefits business organizations. Economic growth entails prosperity among consumers in the form of improved incomes and better lifestyles. With improved incomes, consumers will have greater purchasing capacities, leading them to purchase more goods and services from the corporations offering them commodities. This will translate to improved sales, leading to better profitability for these corporations.

More significant opportunities for expansion and diversification for corporations are enhanced through improved economics. Economic growth creates more entrepreneurial avenues for investments and new market niches (Urbano, Aparicio & Audretsch, 2019). Such opportunities are vital in aiding these companies' expansion and offering opportunities for diversification which is beneficial for them.

To a smaller extent, improved economics are bad for business corporations in that;

Acute competition is a negative consequence that corporations face due to improved economics. With tremendous economic growth, new markets are created since the existing firms cannot serve them optimally. This will lead to the entrance of new players into the market who end up saturating the market. With such saturation, the firms will face acute competition for raw materials and labour, increasing production costs and disadvantaging these corporations.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

References

Cooley, T. F., & Prescott, E. C. (2020). 1. economic growth and business cycles. In Frontiers of business cycle research (pp. 1-38). Princeton University Press.

Urbano, D., Aparicio, S., & Audretsch, D. (2019). Twenty-five years of research on institutions, entrepreneurship, and economic growth: what has been learned? Small Business Economics53, 21-49.

 

By Evans Kiplangat Chirchir 1 year ago . Marked as helpful (157). Marked as unhelpful (122)


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