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A multinational company is a corporation business enterprise with manufacturing, sales, and other services subsidiaries in one or many foreign countries. They are firms that engage in foreign direct investments by owning and controlling value-adding activities in more than one country. Multinational companies reflect the strengths and weaknesses of their own country and work in at least two different national business systems. Multinational companies are powerful tools that transfer production functions, capital, managerial and technical knowledge across nations. They control assets, factories, sales offices in different countries thus diversifying production process. A multinational company needs to adopt international accounting standards that incorporate the aspects of different countries financial statement formulas (Hutton & Giddens, 2001).
Accounting systems: Advantages and disadvantages of International Accounting Standards
The International Accounting Standards Board sets accounting standards that are used across the globe. These standards have no governing authority to enforce them thus making them purely voluntary. These standards carry numerous distinct benefits to the companies that implement them serving as an early pattern for future global regulated and enforced standards (Hutton & Giddens, 2001). The Board sets an integrated code of accounting ethics that are followed by all the cultures in the global business setup. The main advantage of using these standards is that they consider input from professional and legal authorities around the world. This creates a set of ethical guidelines that do not favor some cultures; for example, when a foreign company adheres to its domestic ethical values. The other advantage is that these standards and format of financial statements simplifies international investment decision.
An investor can compare the financial statement regardless of where they originate, this helps him/her in decision-making. These standards also give companies a common financial language that is essential in international trade. They also create a new industry of international accounting consultancy, which offers an opportunity for entrepreneurs in different countries. The main disadvantage of using international accounting standards is the complexity and involvement of many changes in the taxation policies. The small businesses have to incur high cost in complying with these international accounting standards. In addition, individual accountants, certified public accountants, and tax lawyers need to obtain licenses and comply with internationally accepted law making body, which is a complex procedure (Hutton & Giddens, 2001).
The seven P’s in marketing
A marketer in a multinational company needs to understand the basic marketing criterion of seven P’s used to capture and maintain customers within the market. These P’s are product, price, promotion, place, packaging, positioning, and people. A producer should look at his products as if he/she is an outside marketing consultant to ensure that the right products are offered to the market. He should be able to compare his/her product with those of the competitor and ascertain whether his products are superior (Romer & Paul, 1990). The second P is the price. The marketer should develop a habit of reviewing the prices of the products regularly to make sure that they are appropriate in the realities of the current market. There are times when prices need to be lowered others to be raised and still, there are those times that there is the need to change sales’ terms and conditions. The other P stands for promotion, the ways in which a marketer passes information to customers. Promotion and advertisement can increase sales dynamically in both large and small companies. The promotion should be done in a way that will reach a wide number of prospective customers.
The other P is for the place where the product or service is sold. An entrepreneur must make the right choice of the best location where he/she sells his/her products thus creating place utility. Packaging is the other p that needs to be looked at critically by an entrepreneur. Packaging is the way the product appears from the outside as well as other visual elements such as grooming and front office appearance. Customers develop their attitude depending on the impression they receive on the first site of the product. The marketer therefore, needs to package the product(s) in an attractive way that will draw the attention of the customer (Ali 2007). Slight improvement in the outward appearance can result to enormous increase in sales. The next P is for positioning, the place one holds in the eyes of the customer. The success of an entrepreneur depends on the position that he/she holds in a competitive market. Customers define entrepreneurs as either positive or negative and depending on what they think of him. Positive positioning is created through the way an entrepreneur relates with the customers. The last P is for people.
A marketer should develop a habit of thinking about the people inside and outside the business since they are responsible for the elements of all sales and marketing strategy. The ability of an entrepreneur to select, recruit, hire, and maintain the right people that can have the work done in the right manner. This is the most important aspect in a business environment. These P’s should be reviewed regularly to meet the changes in the market and facilitate increased sales that will result to general growth of the business.
Globalization is the spread of connection of production, communication, and technology throughout the world. This connection brings about the intermingling of economic and cultural activities. It is also referred to the effort of International Monetary Fund, World Bank, and other related organizations to create a free market (WBR, 2002). Globalization has brought many changes in business operation from all parts of the world. These changes have both positive and negative impacts in the business environment. The United Arab Emirates (UAE) are among those affected by globalization (Ali 2007).
The positive aspects of globalization include lower marketing cost, global scope, brand image consistency, quick and efficient application of ideas and uniformity in marketing practices. A multinational company incurs initial marketing cost but can be even higher if globalization impacts are not applicable. Globalization has increased foreign investment through the UAE companies by preserving working rights for businesspersons. They let them rent and sell easily without imposing additional taxes. Despite globalization having all these advantages, there are a few disadvantages associated with it. First, there are inconsistencies in the satisfaction of customer’s needs (Ali 2007). Though the products are marketed similarly in all the countries, customers from different parts have different needs. Another demerit is where a particular country needs specific brands and products. The other disadvantage is on the unique laws of different countries, which might be inconsistent with globalization. Infrastructure and geographical barriers sometimes hinder smooth flow of business.
Shuaa capital, a company in the hospitality industry, is one of the companies that has benefited from globalization. This company applies the seven P’s in their marketing strategy to ensure customer satisfaction. They employ competent personnel who can deal with people effectively resulting to the creation of a better public image, which in return improves their sales. The company has also managed to diversify their products creating a wide variety of goods and services. This company uses both online, and direct sales methods, which enable them to utilize place utility because their customers can be served from anywhere within the globe. They use intensive advertisement models that are available to people from all occupations. Their advertisement is designed by expertise making it to be appealing to the audience. Their prices are quite competitive and they are reviewed from time to time giving their customers confidence.
Changes in marketing strategies
Many organizations change their marketing strategies to fit in the new and diversified markets. These changes are meant to improve the organizational operations to revenues that can yield high profits. The marketing changes are also embraced to accommodate changes in technology (Romer & Paul, 1990). Many of the UAE companies adapted to these changes to create room for globalization that give them a wider market. The changes were from the traditional manual means to those of advanced technology where internet and other Media are used to place advertisements and promotion. The idea behind these changes is to increase the market coverage and build friendly customer relations, which in return increases sales and profitability. A firm can also choose to make changes in the production segments or areas of production in order to cut the production costs.
Multinational organizations and globalization have a great impact in many economies that embrace them. They have yielded to great improvement to UAE countries since they have adapted to these changes. Many companies within UAE utilize the marketing Ps resulting to a better market share as the case of Shuaa Capital. UAE community has benefited greatly from globalization for they are open to changes in the marketing strategies.