Risks
for Multinational Companies
Risks of multinational
companies may be explained in terms of facing global competition, political
risks, arranging appropriate resources, policy shift by the governments.
1. Face Global Competition
Multinational
companies face global competition, and therefore a lot of planning is required
to maintain its position. Multinational companies are required to make
appropriate decision about resource allocation & product pricing to compete
internationally.
2. Political Risk
Multinational
company is subject to number of political risks like political instability in
the country, risk of war or civil disturbance, risk of nationalization policy.
The political unrest may exist anywhere, however, in case of third world countries,
such risk are more likely to exist.
3. Appropriate Resources
Multinational
Company finds it very difficult to arrange appropriate resources. These
resources include labour resources etc. for example a company want to extend
its operation into African countries, then she may face a difficulty to arrange
the required resources i.e. skilled labour etc.
4. Quality issues
Multinational companies are more concern
about the quality issue. In some countries due to lake of facilities and
resource like skilled labour, the quality and goodwill at stake. Quality issue
may have global implication for the multinational companies.
5. Policy Change
There
may be change in policy in foreign countries. Taxation policy, or change in
regulations for transfer capital or profit etc.
