MAJOR AREAS OF CONFLICT BETWEEN MULTINATIONALS AND HOST COUNTRIES

A multinational firm mostly regarded as Multinational Corporations (MNCs) is a firm that views the world as consisting of unique parts and markets to each pat differently. Multinationals use multi-domestic marketing strategy which means that they have as many different products variations, brand names, and advertising programs as countries in which they do business. In this case, their products have different packages, different advertising programs and occasionally different formulas

Major areas of conflict with host countries are:

Monopolistic tendencies: These firms are mostly large corporations capable of dominating local market. It becomes worse when the firms are producing or supplying essential products like oil. MNC have been accused by host countries of exploiting the locals by charging exorbitant prices for their products which are essential to the local consumers.

To shield the company from bad publicity, MNC can seek ties with the host country government in order to eliminate such hostilities and accusations.

Exploitation of local employees: In Kenya several MNCs in the manufacturing industries have quarreled with the government and employees’ trade unions due to locals poor working conditions and poor employees remunerations.

To mitigate this, MNC should adhere to the labour laws of the country and observe high standards of employees treatment and improve the working conditions for its staff in accordance with the law. The firm should practice corporate social responsibility in the host country.

Dumping: Host countries have reprimanded MNC for dumping low quality and harmful products in the host country markets. This is more so with China who are being accused of dumping substandard good in the Kenyan market.

MNC should make sure that their products are approved by the relevant bodies in such countries before they start selling them. The firm should endeavor to produce high quality goods as much as possible.

High taxes: MNC and other international firms have had complains with the host countries over high taxes being levied on such foreign firms. This is mostly the case when the host government want to protect the local companies from undue completion from foreign firms.

Such firms should look in countries where there are less restrictions. In Kenya, the government is encouraging foreign investment by creating Export processing Zone where foreign firms enjoy tax holidays for their investments.

Severed relationships amongst nations: Host can develop between the MNC country of origin and its host country. In such cases, MNC are viewed as enemies in the host country and can suffer huge losses due to severed links between the two countries

MNC should diversify and maintain a close eye when conflict between such countries and cracks start emerging in their relationship to avoid huge losses. MNC should scan the environment to detect any major fallouts that can cause it close shop in the host country.

Change of host government policies: Change of policies by host country can render MNC operations illegal. MNC have also been accused of illegal activities like money laundering.

MNC management should remain at the top of government policies and proposals to avoid conflict of interest and incurring losses. The firms operations should be above board by obtaining all approvals necessary for its operations.

Evading taxes: Some MNC have devised methods of evading taxes in the host countries through seemingly legal activities. For instance, transfer pricing has been cited as one of the areas government is losing money in form of income tax. There has been cases of MNC evading customs duty when importing goods and raw materials into the host country for production.

MNC should make sure there they follow the law of the land to the letter to avoid bad publications and hostilities with the host country.

Godfrey Chege