We discussed that there exist possibilities of a transnational, or foreign company will have conflicts between...

We discussed that there exist possibilities of a transnational, or foreign company will have conflicts between host governments and foreign-owned companies. Can you give two examples of why such a conflict is likely to occur given the many motives for entering foreign markets exists. You must have a word length of 150 words or more.

Expert Solution

Conflict between foreign companies and host countries arises due to the following reasons

1) monopolistic tendencies of foreign companies - foreign companies mostly produce products that do not have competition in the host countries due to technological advantages or patents. This results in monopoly price control in the hands of foreign companies, mostly in developing countries. The foreign companies are large corporations and mostly dominates the local firms over which they have monopolistic price control. The increase in price by the foreign firm will affect the general price level and lead to inflation and by reducing price the local firms are driven out from the economy. Example companies like IBM face competition at home but enjoy monopolistic control abroad due to involvement of advanced technologies and large amount of investments.

Foreign firms also sometimes dumped its cheap and low quality products in the host countries to capture the markets

3)Imposition of high taxes - Foreign companies mostly complain about the high taxex levied on them by the host countries . This is done mainly to protect its local firms from the competitions with the foreign companies. Protectionist policies of host countries causes conflict with the foreign firms

Rahul Sunny answered 1 year ago

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