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What are the pressures that encourage MNEs to establish in newly industrialising countries

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Question a. What are the pressures that encourage MNEs to establish in newly industrialising countries?

ANSWER a):
With expansion of Multinational enterprises, there is huge requirement to manage cost of labour and raw materials and have a balanced cost structure in each operation of different nation to thrive profitable business.Multinationalenterprises have different business in different nation where it has to deal with various external factors such as exchange rate fluctuation, government legislation, decrease in purchasing power which pressurise multinational Companies to take advantage of low cost of raw materials and labour, avoid tariffs, and thus have to establish in new industrial countries to take the advantage of international markets in form of low production cost, advanced technology, knowledge, skills of labour, and geographical benefit such as extreme availability of raw materials. MNE's seek to expand in the world and thus always focus on countries having favourable business policies and also other factors such as demand of goods, society preferences, interest rates, government policy and thus make hefty profits with its products and win the global markets.In order to expand the reach and increase large customers, network, increase business partners, increase brand value, have cheap availability of resources such as good infrastructure, cheap labour and climatic condition and increase overall presence in the world. Moreover, Multinational enterprises are centre to the development of nation. Multinational Companies benefit to new industrialising countries in many ways such as increase in employment opportunities, gross domestic product and economy growth. MNC's also benefit from low labour cost in newly industrialised countries(Rahman and Ferdausy, 2009, pg.1(1)). Moreover, government also support multinational Companies by granting exemptions in tax and relaxation in other regimes. Therefore, both countries and MNC's are benefitted. Overall it is seen that there are lot of advantages and factors to get an encouragement to establish in newly industrialised countries.

b. What are the pressures that encourage politicians in newly industrialising countries to allow MNEs to establish in their countries?

ANSWER b):
Politicalhold a responsibility to enhance the growth of economy by generating more employment, providing quality goods, educating more people, decreasing poverty, and ensure a high GDP growth of the countries. Politicians commit the growth of economy by taking many initiatives and make themselves responsible for the development of industries and help small and medium sized business to grow and prosper in the market. By allowing MNE's in the countries they want the growth of employment, access to new technology for business and quality products for society under low rates. MNE's holds the capacity to produce goods efficiently which can help local businesses to learn and grow their business as well. MNE's also bring technical knowhow, increase the knowledge and skills of workforce and give better payment to the society which increases their purchasing power and ultimately growth of economy. Politicians are eager to attract foreign countries to come and establish business specially export oriented investments, build technology spill over, and generate quality jobs. Political institutions provide incentives to makes of policy to encourage more foreign investments which are mutually exclusive(Pandya, 2016, pg.2(1)). Political also seek a healthy competition between local producers and foreign companies which encourage more effective production at domestic level.

c. How can MNEs act ethically in host countries?

ANSWER c):
According to Godiwalla and Damanpour, 2006, pg.1(4)), MNE's must be honest, fair, show integrity, ensure safety of ecology and raise and meet norms of industry. MNE's must not show a wrong behaviour especially in case of cultural differences and can maintain a standard policy for employees to behave ethically in organization. MNE's can provide coaching for teaching employee on how to professionally behave and also follow up for ensure that there is healthy environment at workplace. MNE's need to adapt a customise ethics fit to culture keeping core universal ethical values. Moreover, MNE's should also ensure if its suppliers are following the ethical principles in their business. MNE's must provide reliable, accurate and transparent business information to all stakeholders to aid them to take right decisions.

Multinational Corporations can act ethically in host countries by providing safe and quality products, meet environment standards, follow legislation requirements and be transparent in reporting about the business operations. Multinational enterprisesshould alsokeep in mind human rights while delivering goods, services and running operations. Majorly, multinational Companies are required to utilise the resources very efficiently and safeguard the ecosystem by decreasing their release of carbon emission or any other dangerous gas from the plant.

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