Improved economics are a global phenomenon. Is this good or bad for global corporations? ...[Show More]
4 years ago
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.
By Elvin 1 year ago . Marked as helpful (358). Marked as unhelpful (112)
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 Economics, 53,
21-49.
By Evans Kiplangat Chirchir 1 year ago . Marked as helpful (157). Marked as unhelpful (122)
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