Idea of Multinational Organizations

Question: Discuss about the Idea of Multinational Organizations. Answer: Introduction: Globalization might be perceived as a simple term but its definition is rather complex. In this era, we can easily communicate and share cultures through travelling, trading and transportation. Hence, these events effectively explain globalization where if something happens in an area it could have an effect worldwide. Based on the above explanation globalization is the transformed way in which countries interact. Therefore, for globalization production of consumption it refers to the integrated economies where goods and capital flow across borders for consumption. Hence, this means that a fall in trade barrier in one state tends to increase trade between producers and consumers in another country. In this globalization era, firms are able to expand their operations globally, while they maintain their stage of production in the country where it could be executed in a least cost, transmit their ideas widely and the new ways of developing their products around the world. We could conclude that the idea of globalization production of consumption tends to transform economies, politics and social issue. As a results, there is transformation in states power and the states context of operation which production for consumption purposes. Explanation of Race to the Bottom Based on Oatley discussion race to the bottom is a situation whereby firms and countries tend to compete with each other by lowering wages and the living standards of workers. This tends to develop a situation whereby production of goods shift to a place where wages are low and workers rights are minimal. If we could create an analysis of Oatley debate the race to bottom analysis arises from globalization and entry of developing state in the global market. Hence, this new entry into the international trade and investment turns to lowest cost country easy when they become integrated into the worlds economy. To attract investments countries tend to open their markets but as a result of international competition labor tends to be relaxed, tax regulation are also enhanced and detriment of social policies is also experienced, which results to race to the bottom. The issue of race to the bottom is similarly experienced in organizations. Oatley has provided that changes in regulations tend to challenge MNCs production cost. Hence, it is rather expensive for a firm to treat chemical waste before disposal. But, as a result of the high cost of chemicals used in treating the water organizations tend to seek for alternatives. To avoid all these emerging challenges an MNC could establish its business in a country where regulatory standards are less costly. The idea of multinational organizations shifting to the less stringent standards countries tends to pressure the lax regulatory standard states to loosen their regulation to maintain MNC back home. For countries who refuse to loosen their regulation they tend to suffer less investment which has negative consequences. Hence, this tends to be a threat to most governments which creates the need of them responding to the issue of race to the bottom.