The Multinational Company is in Trouble

The rise of multinational corporations in the 1990’s created a beneficial system that many less developed countries flourished on. Multinational corporations were giving money to countries in exchange for cheap labor and low costs. Trade boomed and consumer choice of products became the norm. Companies such as McDonalds, Ford and IBM led the way to a global society where MNC’s do about 50% of trade.

President Trump has recently announced through executive orders, higher tariffs and the abolition of trade agreements in favor of a more protectionist stance. MNC’s have earned a reputation of cutting corners to increase profits and are not favorable by the new administration. However, this is not necessarily the case within the last 5 years. According to the article, profits have decreased by 25% and returns on capital are the lowest in 20 years which, is a significant decrease. 

Consumers have long benefited from price and consumer choice of multinational corporations. With the protectionist stance taken by the new Trump Administration, there is going to be even more profound effects on the market and multinational corporation profits further. The article believes that with the protectionist stance taken, there will be fewer firms in competition, higher prices and slow innovation which, would hurt not only the firm but also the consumer. 



http://www.economist.com/news/leaders/21715660-global-firms-are-surprisingly-vulnerable-attack-multinational-company-trouble