Theoretical Background

Multinational corporations are business units that operate in various parts of the world and they have a strong influence on patterns of factor movements and world trade. The success of such multinational corporations highly rely on execution strategies like effective technologies, right product markets, and geography is believed to be the most vital aspects of long-term economic performance. Moreover, based on several studies, approximately two-third of the organic development of Western Companies can be subject to the fact that they have executed the previously mentioned strategies (Weisbrot, 2012). Besides, the most vital element that distinguishes a true multinational from other companies is its commitment towards research and development, manufacturing, marketing, and financial opportunities throughout the globe, instead of just relying on the domestic situation (Arribas & Vila, 2007). Therefore, identification of such causes for the success of multinational corporations is crucial. However, recognition or prediction of short-term causes cannot provide an effective understanding and therefore, forecasting of long-term causes for the success of MNC’s are being identified. The early corporations supported colonialism through international trade and building colonial trading posts across, they used to create and maintain seller and buyer colonies and exploited their colonial resources as well as labor in the colonies established and the profit they would get in return would be again reinvested in the home country development (Nielsen, 2007). This is how the evolution stared which took the form of establishing in this era no colonies built legally offices and factories across the country having the main centrally controlled head office in the home or parent country. Therefore the evolution is not started recently but it has made its origin from past three to four thousand years ago (Fiss & Hirsch, 2005). The globalization of society and economy is a natural process as a party of social evolution in the planet we live in. Specifically, the technological advancement in the last decades has led to a path of huge dynamization of the success of international expansion of business activities. The evolution also paved its way when the level of competition between industries and businesses grew in the worldwide economy. Earlier the stage of competition could not grow at high levels due to national protectionism issue, high transaction costs means of simple and difficult communicating problems and transport limitations (Arribas & Vila, 2007). One of the other reasons associated with it was low foreign direct investment but due to changes in the recent years based on technological advancement, liberalization, wider encouragement of globalization, these multinational corporations grew and evolved at a higher rate because new technologies paved way to increasing economies of scale in the market thereby leading to reduction in transport and communication costs.

The research over here comprises of the causes of the success of the multinational companies. The main reasons for the success of the multinational are globalization. The main stress of the paper is on the global fortune 500 companies (BEA, 2016).  In this scenario qualitative, as well as quantitative methods have been used. The selection of the journals has been done considering their benefit in the course of study and from the point view of the knowledge. The journal shaping globalization has been very effective and provides a comprehensive knowledge in terms of the success of the multinationals (Steger, 2009). Further, the journal Levels of Subjective Globalization is another attempt in explanation of the causes of the success of multinationals. The main reason for the selection of the above article helps in providing comprehensive knowledge and enables taking a valid stand on the process and growth of the multinational. For testing the model, the data of the fortune 500 company is present that will help in deriving at a proper conclusion.

Macroeconomic Trends

Multinational corporations own and control the production or manufacturing of goods and services as well as sales of these goods and services in other countries apart from their home country. The unique factors of these corporations are that they are huge in size; their budget of business crosses many small countries total budget of the corporate world and the way they centrally control their worldwide operations in the parent country (BEA, 2016). The main work of multinational companies is importing and exporting of goods and services, investing in foreign countries, sell and purchase of a license in the international market, engaged in contractual manufacturing, assembling  facilities of manufacturing which mean helping a local manufacturer in a foreign country to produce their respective products. Multinational Corporations have institutionalized international management experience in organizational routines and structures yet. They have access to internationally dispersed information and resources. They have learned the lessons of internationalization in the sense of developing international business activities like market selection, market entry and development processes (BEA, 2016). The increasing expansion of this multination evolution requires a balancing of these traditional advantages of Multinational Corporations with the advantages of flexible autonomous subunits to strengthen their competence of networking and therefore create a successful worldwide company benefiting each and every country involved in its operations, increasing employment opportunities, paving way to get more socio-economic multinational corporations (James, 2014). There grew on global stage independencies of markets as well as subsidiaries of multinational corporations. There was the development of global market segments and the formation of globally integrated Multinational Corporations which exploited global independencies by integrating their own activities on a global basis. The evolution of global competition has been marked by all these growing expansion factors (Maaloul & Zehgal, 2011). Companies can strengthen their ability an international position by adopting a global orientation on their operations. Multinational Corporations evolution focused on three important key factors for growth that are establishing of global business activities, building strong international networks and bringing in global corporate transformation (Schein, 2009).

There are three identified macroeconomic trends in relation to the trends, which can alter the business landscape. These can effectively alter the underlying international economy as a whole.

Public sector activities can play a key role in making the productivity gains significantly. The unparalleled aging of various populations throughout the globe can play a key role in calling for newer stages of creativity and effectiveness from such public sector activities. Furthermore, in the absence of adequate productivity gains, the burden of health care and pension can drive taxes to constrained proportions. Moreover, many governments of developing markets are under an obligation to decide what levels of social services must be offered to the public who stagnantly demand retirement and healthcare securities (Prahalad, 2005). Nevertheless, the implementation of established private-sector strategies can become pervasive in the offering of social services in both developing and developing economies.

Such economic activity centers can assist in deeply transforming the underlying international economy. It cannot only shift internationally but also regionally. Furthermore, because of economic liberalization, developments in capital markets, technological advances, and demographic shifts, the present economy has embarked on an immense realignment of financial operations (Klaus, 2009). For instance, today Asia is responsible for more than thirteen percent of the GDP of the world, while the Western Europe accounts for thirty percent. Therefore, it is observable that new centers of economic activity can result in the success of multinational corporations. Besides, shift within economies are as relevant as the ones incurring across other economies.

The Role of Public Sector

The consumer landscapes alter uniformly and diversify significantly. Approximately a billion fresh consumers can now take part in the international marketplace as economic development in the emerging markets plays a key role in pushing them beyond their threshold limit of $5000 towards annual household income. Besides, from the year 2015, the spending power of the consumers in the emerging economies have highly enhanced from $4 trillion to more than $10 trillion that is nearly the present expanding power of the Western Europe. Furthermore, shifts within the segments of consumers in emerging economies will also be great. Such populations are not only aging with due course of time but also changing in different other ways as well. For instance, until the year 2015, the Hispanic population forming part of the United States can possess more spending power, which is equal to around sixty percent of that of the Chinese consumers (BEA, 2016). Besides, such changing international marketplace has also enabled the consumers to pursue all relevant details and prior access to every brand and product, irrespective of where they reside. Nevertheless, such cases have resulted in the success of multinational corporations in the entire world.

These causes also assist in the success of multinational corporations in the global scenario. However, even though these are less predictable and their influence on the working environment is minimal, yet these can play a key role in significantly altering the way people work and live.

The behavior and role of large businesses come under very strict examination. Therefore, as and when such businesses diversify into the global market, and as the economic demands upon the environment are enhanced, the level of societal doubt about such large business is more likely to enhance (Saggi, 2002). The doctrines of the present international ideology of business, for instance, free trade, the value of shareholders, repatriation of profits, and intellectual property rights (IPR) are not taken into account in many areas of the world. Therefore, environmental scandals cannot be avoided because of the possibility that such incidents will be blown out of proportion and as a result, it may result in statutory and political counterblasts. Nevertheless, the increasing intensity and scope of international business, together with the development of truly huge multinational corporations can play a key role in exacerbating the complications in the upcoming years. Besides, it is the key duty of such business and their management to illustrate and argue more effectively about the social, economic, and intellectual situation. This is because it can assist in supporting other businesses in the society and the intense contribution they make towards building social welfare.

The demand for natural resources will enhance with the due passage of time, thereby also create a relevant burden upon the environment. Moreover, as economic development eventually progresses, especially in the developing markets, the utilization of such natural resources has become utmost (Sorrells, 2013). For instance, the demand for oil in the emerging markets is expected to enhance by fifty percent in the upcoming two decades, and without the presence of innovative discoveries or radical technologies, the supply of natural resources is more likely to fail. Besides, it can be observed that there is an enhancement in demand in other commodities as well. For instance, in China, the demand for steel, copper, and aluminum has enhanced three times in comparison to the last few years. This sheds light on the fact that the resources of the universe are increasingly being put to use (Conversi, 2010). The insufficiencies of supply of water are also one of the prime aspects of growth in most of the countries, and the atmosphere uniformly necessitates dramatic alterations in the behavior of humans in order to keep such resources from being terminated. Nevertheless, innovations in technologies, utilization of resources, and strict regulation will be the key towards building a world that can drive effective economic development and manage the demands of the environment as well.

New Economic Activity Centers

The role of technological connection can assist in altering the way people interact and live in the global scenario. Furthermore, public sectors, businesses, and individuals are learning how to make an effective utilization of Information Technology in their designing procedures, and in enhancing and accessing such knowledge. Moreover, innovative developments in the field of laser technologies, biotechnology, and nanotechnology have assisted in creating an effective market scenario (Porter, 2002). People operate not just internationally but also continuously and therefore, they establish relationships and communities in innovative ways (James, 2005). This can be proved by the fact that in the current scenario more than two billion people make use of cell phones, more than nine trillion emails are sent every year, more than a billion Google searches are made every day, and much more (Lechner & John, 2011). Nevertheless, for the first time in the history, the key constraint upon the scope of economic and social organization is not geography.

These patterns play a key role in driving significant change in the enhancement of the multinationals.

Knowledge is increasingly present and subsequently, it is increasingly specialized in nature. The most assured manifestation of this pattern is the development of search engines like Yahoo and Google that assists in making an almost indefinite quantum of data available in a matter of seconds (Rosenbaum & Joshua, 2009). Besides, access to such knowledge has become universal in nature in the present scenario, but the transformation is much more intense than simply wide access. Besides, the development of new models of knowledge production, ownership, distribution, and access has been assisting several corporations in the global scenario (Bridges, 2002).

 In relation to the changing regulation of the market structure and introduction of innovative technologies, the non-traditional models are also emerging that co-exist in the same structure and sector. Moreover, in various industries, barbell structure is emerging wherein few giants are at the top, and a narrow in the middle, and then smaller players at the bottom. In the same way, corporate borders have become blurry because interconnected ecosystems of consumers, producers, and suppliers have started developing (Conversi, 2010). Nevertheless, winning corporations that utilize effectiveness attained by new structural possibilities can capitalize on becoming a robust player in the market.

According to studies, overseas expansion of corporate refers to a fact that firms have become multinational in nature, with FDI (Foreign Direct Investment) being implemented into their operations. Further, for most of the companies, the procedure of globalization does not happen by conscious designs and instead, it is the outcome of a series of reactions of corporates to various opportunities and threats arising abroad (Manfred & Steger, 2013). Therefore, in order to address such complications, companies eventually enhance their commitment towards global businesses, thereby framing measures that are more sophisticated in nature. Moreover, this series generally incorporate export, securing of licensing agreements, establishing foreign sales subsidiary, and creating global production (Baxter & Matear, 2004). Nonetheless, this measure towards overseas development assists in minimizing the risks in the uncertain foreign environment. Besides, by globalizing in phases, a company can eventually progress from a relatively low return and low-risk environment to a high return and high-risk environment.

The research will take into consideration both qualitative, as well as a quantitative research method. Qualitative research is a type of research that helps collection of data from real experiences of people that surrounds the atmosphere. This is done by dint of interviews, action research, and focus group. Interviews are a powerful mechanism that enables discovery of the life of people via unique experiences. It can be structured, semi-structured and unstructured.  Structured questions follow a defined course of action while unstructured happens through normal conversations.

The data for this research is collected through qualitative, as well as quantitative research. Quantitative research is used as it gives an overall view of the matter and helps in the analysis. The gathering of data is done can be easily measured and represented in table or graphs. In this scenario, it is done in the form of surveys. The survey extends to fortune 500 companies. As it is backed up by figures, therefore, the results can be validated easily. The methods utilized are the primary data and the secondary data.  Primary data is done using the questionnaire.  Questionnaires are sent to the fortune 500 company and standardization answer helps in evaluation of the data. The survey questionnaire was used to know about the major causes that have helped the companies in attaining success. Further, the main factor that helped the company was explored. On the other hand, secondary data was even used through journal, books and conference papers.

The main use of descriptive statistics lies in the fact that it helps in the understanding of the data set and summarizes the sample, as well as measurement of the data. The most noteworthy being the mean, median and the mode, used at all level of analysis. With this, it was easy to have an insight into the multinational growth and success. The table below gives way for descriptive statistics for the variable utilized in the empirical analysis and separated for local firms and big multinationals.

The table provides a greater explanation of the questions asked to the respondents. A larger percentage of target population agreed to the fact that globalization was the major driving force and enabled the multinational to attain success. 72% of the population agreed that globalization is the major driving force. Another driving force that comes to the forefront is innovation and 61% of the population agreed to it. It helped the companies to respond to the external environment.

A larger percentage of respondents agree that globalization is one of the driving force that has helped the multinationals in attaining success. The study and the answers from the respondents reveal that the act of the companies along with the process and control has led to change in the overall system of the multinationals. The strategies contains various other attributes such as  planning, internal control and dynamic capability. The result is higher for the big multinational as it has opened a strong and active link with the outside world that has a direct bearing on the success of the multinational. Moreover, the values and expectations have further raised the performance criteria. 

Recommendation and Conclusion

Globalization has impacted every area of the world and all type of organization.  The multinationals have succeeded in a very short span and it is owing to the concept of globalization. Further, the managers have played a bigger role and contributed towards the success and the growth story.  It needs to be noted that successful organization was innovative and dynamic in nature. The same can be taken into consideration by other firms that are destined to make its appearance in the list. It is important for the managers to enhance the development of learning organization and develop a culture that will lead to enormous success.

Multinationals have succeeded in a short span and that can be attributed to the global factor along with the strong operating abilities. It is strong evidence that the growth and success are achieved when the financial constraint is eliminated.  Hence, a differential ability is needed by the organization so that it achieves on a higher scale. However, it needs to be noted that local firms experience greater problem as compared to the multinationals. The findings are clear that the multinationals enjoy a formidable position owing to the position and the resources.

Multinational corporations benefits to a large extent due to their globalized approach in many different ways. These companies get benefitted due to economies of scale as they spread their research and development and advertising cost over their globalized sales, utilizing their technological and managerial intelligence in a globalized platform thereby reducing additional costs associated with it. They also utilize the advantage of underpriced working laborers from certain developing countries. All these factors together make multinational corporations worldwide very successful and also one of the demanding corporations in this era.

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