Multinational enterprises operating in two or more countries with the aim of gaining a competitive edge and promoting globalization. However, the MNEs are often plagued by various volatile challenges in other countries such as changes in political scenery, changes in the business cycle, competitive and resource challenges. This essay will discuss the macroeconomic challenges faced by MNEs.
Regulatory changes affect multinational corporations through certain factors such as increased regulatory inspection, and investigations. The regulators often impose a lot of pressure on the MNEs. The adjustments that come with regulatory changes may in a way affect the productivity of the corporation. High instances of regulatory changes could see the corporation closing down the branch and moving its business elsewhere. Another challenge observed ensues from economic conditions. A failing economy greatly affects productivity and stability of part or whole of the corporation. Economic conditions change with business cycles. In many countries, economic conditions are influenced by exchange rates, fiscal policies and inflation. Issues such as acts of terror and natural disasters are some of the challenges that can befall a corporation. Such issues are beyond the control of the MNE and affect them negatively. Such issues may bring about closure or moving the MNE base from the country or to a different region.
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Global political volatility is often experienced in almost every nation. The lack of stability in politics has previously affected the success of MNEs. Major corporations keep away from politically volatile regions to safeguard their business interests. The factor costs in a country also pose a challenge to MNE. The price at which the means of production, that is, land, labor and, capital determine whether the corporation will decide to set up a branch in the country. Marxists have argued that factor costs represent the intricate value of production means. Higher factor costs discourages corporate investments.
