One must take note that a multinational business is not one which just sells goods in more than one country. To be called a multinational, a business must produce goods or services in more than one country. In other words, there is more to multinational companies than one thinks they know. There is a difference between Multinationals and global corporations. The multinational corporation operates in a number of countries, and adjusts its products and practices in each at high relative costs (when the price of a commodity as it compares to another is high). Meanwhile, the global corporation operates with settled constancy at low relative cost as if the entire world is one entity; it sells the same things in the same way everywhere. According to the (International Labour Organisation) ILO report “The essential nature of the multinational enterprises lies in the fact that its managerial headquarters are located in one country, while the enterprise carries out operations in number of other countries”. Looking at the impact of multinational companies on their host countries, especially in Ireland, there are obvious advantages and disadvantages in terms of impact on employment, small businesses and culture.
Ireland is known as one of the most open economies in the European Union (UN), and this for sure is true. IBM in 2010 ranked Ireland as first in the world in terms of job creation by foreign investment relative to their population (Walsh, 2010). Over 13,000 multinational jobs were created in Ireland in 2011. Twitter, PayPal, Intel, IBM, Coca-Cola and Pfizer were among the major companies which made powerful investments that year. Also, almost 146, 000 people are employed by companies which were attracted to Ireland using the IDA (Industrial Development Authority). Governments are also said to improve employment in this case, whereby Subsidiaries are responsible for aiding about half of the manufacturing employment (Berry & McDermott, 2001).Back to the more recent analysis on the employment sector in Ireland, latest IDA numbers show employment in the multinational sector rose to 187,000 in 2015. This is as a result of IDA-backed firms creating just under 19,000 jobs in 2015, therefore bringing total employment sector to 187,000, which is the highest level in the IDA’s 67-year history. An estimate was made, stating that for every 10 jobs created by FDI, a further 7 indirect jobs are generated in the wider economy. This means about 318, 000 jobs or one in five private sector jobs are supported by Iris-based multinationals. As a result, by 2020 the IDA’s latest strategy targets the creation of 80,000 new jobs. For instance, Apple made a heavy investment of €850 million in a new data centre in Athenry, Co Galway. Facebook also made a huge investment of €200 million in a new data centre in Clonee, Co Meath. This drastically boosts the economy of Ireland. According to Richard Bruton, the minister for education and skills, “Multinationals have played a massive role in the state’s economic recovery”. (Burke-Kennedy, 2016)
Multinationals are said to have dominated the market for different products in Ireland, and this makes it very difficult for local firms to be able to thrive. For example, supermarkets in Ireland are squeezing the margins of local corner shops, therefore leading to less diversity. The reason behind this is that due to the multinational companies’ size and scale of operations, they are enabled to benefit from economies of scale, enabling lower average costs and price for consumers. Economies of scale is generally known as those factors that can help a business reduce their average cost of production as it increases. Examples of this are: purchasing, marketing, managerial and technical economies. In developing economies like Nigeria, big multinationals can use their economies of scale to push local firms out of business, but for a developed economy like Ireland, this may not always be the case as a firm like ‘Penneys’, an Irish owned clothing company, has its customers fully interested and cannot be pushed out of the market.. According to the Central Statistics Office (CSO), the Irish gross domestic product (GDP) grew by an enormous 26.3 percent in 2015 rather than the 7.8 percent that was previously estimated in March. Another problem small firms in Ireland face relating to multinational businesses is the fact that multinationals can change standards for doing business, therefore putting local firms in the position of having to upgrade so that they can rise up to the new standards. In many situations, small businesses are not able to survive because of competition between these multinationals they are coming up against. This can be as a result of multinationals offering high volume deals and discounts that small businesses cannot match.
The Irish culture is very diverse and is said to be unique, from their customs to traditions, language, music, art, literature, folklore, cuisine and finally sports. But in terms of business, multinationals have influenced some parts of Irish culture. For instance, fashion chains are impacting the way one dresses, meaning multinational clothing shops like Forever 21, Zara, H&M and other popular shops influence the way the Irish dress. Also, industries like Google, Facebook and Apple, have boosted the usage of technology in Ireland, along with other technological industries, meaning that technological advancement is embedded in national cultures. The common environment (Ireland), shared norms and cultural systems enhance interactive learning and innovation- especially in workplaces with cultural diversity (Cantwell & Molero, 2003)In the book, Culture of information Economy-Influences and impacts on the Republic of Ireland,the author stated that coping with different cultures can be made easier by focusing on the common point. She gave an example stating how the Irish workers responded very favorably to the open, nonhierarchical management style of the American firms, and they saw this style as more similar to Celtic-Irish culture than those essentially British modes of thought, feeling and behavior that they experienced in Irish firms. There was a contrast in that same statement about the Irish workers. She said “This perception, however, may not always sit well with the indigenous people, as was the case in Ireland (Trauth, 2001)”. This was because the view point that was held by the Irish workers and managers was that while multinationals were bringing certain welcomed norms and va