Question

Given the reading thus far, assuming that you are a manger of a multinational corporation. What kind of environmental factors do you consider in making decision that you believe maximize profit? Let us turn the role and that you are a manger of national company. Would the environmental factors you examine in making sound decision differ from those you considered when you were managing multinational company? Why? How?

Answer 1

Environmental Factors & Profit
A multinational corporation aiming to maximize profit has to analyze the natural resource availability of the nations where they are investing, population density, climatic conditions of the region etc. High availability of natural resources which help the corporation in its production or service can leads to reduced cost of production as a whole. Population density can increase the supply of labor that is an advantage for the firm to hire labor at low wages. Availability of resources and low cost labor helps the firm to produce more than else. Choosing regions with low resource availability and high paid labor will lead the corporation to loss. The climatic conditions of the region opted to invest is also a factor determining the profit of the firm. The type of production or service the company provides has to be analyzed with the regular climatic structure of the region and should be confirmed whether it is suitable for the functioning of the corporation.
Environment factors will affect the companies aiming to maximize profit are the same without any difference in the type of the companies whether it is national or multinational. National companies may have more idea about the environmental factors that can encourage production and earn better profit. Resources, population, climate which affect the functioning and performance are all factors determining the profit that the company earns. Difference is that a national company will be more accurate about the environmental factors than a multinational company.