What are the Benefits of Being a Multinational Organization?

As you run your business, you might decide to move your operations to more than one country. A company is not referred to as a multinational organization because it exports to other countries. It has to have foreign direct investment in that country. 

It is a wise decision to have your operations in different countries rather than centralizing your operations but only exporting to other countries. In other words, being a multinational organization like australian standards means you have production and distribution firmly rooted in different countries. 

Here are some of the advantages you are likely to enjoy after rising to the rank of an international organization:

Production specialization

Production of particular goods can never be the same in each country. The output of some goods requires that you have different aspects of your interest be produced in other countries. This brings about product specialization. 

A good example is a mobile phone and laptop production industry. Companies based in the USA have the advantage of having skilled personnel who develop great ideas. However, the actualization of these ideas is expensive due to the high cost of production

For this reason, companies tend to base their production in China, where there is a cheap cost of production. China offers cheaper labor, thus making her the best country to produce your goods. 

Fewer taxes

The main reason for beginning a business is to rake in maximum profit. However, you cannot achieve this if the taxes are high. For this reason, companies tend to spread their branches to other countries. 

It is estimated that about 33% of the most profitable companies in the USA have subsidiaries in countries such as Luxembourg. Different countries in the world have other taxation policies. Developing nations or third-world countries tend to have less strict guidelines to pool foreign investors. 

For a business to make exports in a country, they are subjected to quotas and tariffs. However, there is a loophole to bypass this problem. If a country starts production in a particular country, it will be exempted from import duties. 

Wider market share

If a business is internationally recognized, it has the advantage of having a high demand internationally. For this reason, huge companies tend to open shops in different countries. This will help to cut the cost of production for the business. 

In addition, successful companies might reach a point of market saturation. This means that the goods produced in a country are more than required. This will force the company to look for other markets elsewhere.

In other instances, the use of certain goods in a country might decline. A perfect example is the cigarette industry in Western countries. Since there is a massive decline of tobacco consumers in those countries, they have shifted focus to developing countries in other parts of the world. 

Conclusion

There are very many benefits that come with an organization being multinational. International organizations tend to enjoy the benefit of having a broader market share. It is also an opportunity to work with other multinational companies like australian standards as you embrace a diverse work environment.

 

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