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PS35 Introduction to International Relations Assignments Solution
Key attributes of powerful companies
In the current period, the global commercial framework is highly oligopolistic and is mainly dominated by a handful of immensely powerful and large companies, with considerable human resources, market dominance, clientele, competitiveness, profitability and global presence (Popescu 2013). The main and common attributes of these companies are as follows:
1. Compelling vision- The primary attribute behind the formation of most of the powerful brands across the globe, is the presence of a well-established mission, vision and also value statements (Doz 2017).
2. Strong brand presence- Most of the “Superstar” companies, have strong and global brand presence and their brand is easily recognised by majority of the population of different countries.
3. Huge market dominance- Most of the powerful companies, like Google, Apple and others, in the current period, can be seen to mostly operate in oligopolistic or nearly monopolistic market, with low level of competition and most of these companies enjoy huge market share, loyal clientele and considerable dominance in the market (Heidenreich 2012).
4. Huge merger and acquisition activities- Most of the influential companies and global business giants can be seen to be expanding their domain of operations and businesses in different parts of the globe, as well as in different markets, through merger and acquisition activities with different companies and related individuals.
5. Anti-competitive and predatory pricing activities- The big companies commonly pose immense entry barriers to new comers in the markets, by utilising their economies of scale and efficiencies in production, which enable them to use the techniques of predatory pricing and other non-competitive measures (Gammeltoft, Filatotchev and Hobdari 2012).
Criticisms of the power possessed by big companies
The immense power and dominance of the big companies, have also been criticised substantially, over the years, by customers and population across the globe, of which the primary ones are as follows:
1. Lobbying and political influences- One of the primary criticisms which is endured by most of the big companies across the globe, is that many times to gain more power as well as to achieve their own goals and personal interests, these companies engage in lobbying with similar firms or often illegally with government officials, with considerable power and capabilities, which in turn, creates an anti-competitive market structure, where these companies enjoy special benefits and protections, which in turn hampers the small producers as well as welfare of the customers in a society (Hill et al. 2013).
In response to the same, the government can engage in creating monitoring and strict vigilance framework to eradicate any kind of adverse lobbying activities in the economies. It can also be taken into consideration, to build a policy framework, where protection can be provided to the small businesses, for them to sustain the level of competition faced by them from the big companies.
2. Hiring of high profile politicians- One of the habits and operations of the big companies, which have been facing tremendous criticisms across the globe, especially in the contemporary period, is that of hiring of lobbyists as well as employment of prominent politicians across the globe, with immensely high profile, in important posts or as advisories in the companies (Blau, Brough and Thomas 2013). The primary reason behind the huge criticism of this particular activity of the multi-national and big companies, is that hiring these prominent politicians help the concerned companies to immediately get access to immensely crucial aspects like that of policymaking and other confidential aspects. Hiring of such high-profile personnel with political backgrounds also help the companies to influence the existing political parties, thereby gaining non-uniform advantages.
The same can be prevented by the governments, especially for those companies which do not contribute to the increase in the social and economic welfare of the populations of the countries, in any way, by imposing restrictions in the aspects of employment of the political and ex-government officials of high responsibilities and posts in private and multi-national companies (Economist.com 2018). However, the big companies, often counter these negative criticisms, by providing the argument that employing these officials with huge knowledge management and peolitical as well as policy-framing frameworks, not only benefit the companies themselves, but also helps them in designing their product and pricing in such a way that the overall population and their customers are benefitted considerably (Mathur et al. 2013).
Relationship with the conceptual framework
From Market to Political Power
The above discussion of the criticisms and responses to the same regarding the different activities in the operational framework of the big and globally dominant companies can be viewed in the aspects of the transition of the operations of the companies from sole market operations to being more than that. In the contemporary period, the globally dominant huge companies and multinationals, not only remain content by expanding their business domains and market operations, thereby gaining higher number of customers, but also exert their impacts and influence on the overall economic, political and social aspects of the regions and countries where they usually venture (Mathur et al. 2013). The huge operational base of the companies, along with large number of customers, huge capacity to invest and robust commercial and political tie-ups, help the companies to make a considerable impact on the political dynamics of the countries. The political officials are influenced and monetarily or non-monetarily incentivised by these companies, which in turn indicates towards the entry and significant presence of these big and dominant companies, not only in the markets, but also in terms of influencing the political power dynamics and operations of the countries or regions where they venture.
Theorisation of Corporate Political Power
The above discussion about the traits of the large business organizations and their operational frameworks, across the globe, indicates towards the fact that in the contemporary period, the big companies and MNCs have been entering different domains except that of market operations and one such significant aspect is that of the power of these organizations, to influence the political domains and operations like that of public policies, deliveries of public services considerably, often by entering into some kind of partnership with the governments of the different countries (Julio and Yook 2012). This in turn, indicates towards the growth of corporate states and also of political powers of the corporates, which in comprised of corporate social responsibility, corporate governance, dominance and similar aspects, thereby indicating towards the need to theorise corporate political powers.
1. Blau, B.M., Brough, T.J. and Thomas, D.W., 2013. Corporate lobbying, political connections, and the bailout of banks. Journal of Banking & Finance, 37(8), pp.3007-3017.
2. Doz, Y.L., 2017. Strategic management in multinational companies. In International Business (pp. 229-248). Routledge.
3. Economist.com 2018. The rise of the superstars. [online] The Economist. Available at: https://www.economist.com/special-report/2016/09/17/the-rise-of-the-superstars [Accessed 3 Oct. 2018].
4. Gammeltoft, P., Filatotchev, I. and Hobdari, B., 2012. Emerging multinational companies and strategic fit: a contingency framework and future research agenda. European Management Journal, 30(3), pp.175-188.Heidenreich, M., 2012. The social
5. embeddedness of multinational companies: a literature review. Socio-Economic Review, 10(3), pp.549-579.
6. Hill, M.D., Kelly, G.W., Lockhart, G.B. and Van Ness, R.A., 2013. Determinants and effects of corporate lobbying. Financial Management, 42(4), pp.931-957.
7. Julio, B. and Yook, Y., 2012. Political uncertainty and corporate investment cycles. The Journal of Finance, 67(1), pp.45-83.
8. Mathur, I., Singh, M., Thompson, F. and Nejadmalayeri, A., 2013. Corporate governance and lobbying strategies. Journal of Business Research, 66(4), pp.547-553.
9. Popescu, G.H., 2013. Macroeconomics, effective leadership, and the global business environment. Contemporary Readings in Law and Social Justice, 5(2), p.170.