Multinational companies and corporations are a major part of today’s economic and financial-based world. Companies offer different product or services to their target consumers. In other words, a corporation can be defined as a legal body running a business with the members possessing limited liabilities. Several people unite to give life to an entity and make it one operational unit.
Despite being a business entity, a corporation holds legal and financial rights as an individual and has the authority to claim like a person. However, an entity may lose its employees and even long-term assets but not the building. These corporations and the services they provide have become a common part of our life and people find it difficult to let go of these facilities.
Negative Impact of Corporations on the Society
Corporations and their development have played quite a role in the transformation of the current industry and industrial trends. People are more tech and corporate-oriented which has had a negative impact on the natural and more environment-friendly procedures of early businesses.
However, the negative impact of corporations persists in society and people have been affected by it – knowingly or unknowingly. Listed below are some of the most common influences of corporations and the industrial world on society.
· Cultural Impact
The world is diverse and so is the culture of several billion societies, countries, and cities within the globe. These homogenizing trends and fashion statements have caused these unique cultures by making them follow the same rituals. This has resulted in the entire globe and people looking the same and following the same kind of trends. It has also allowed the countries to demote themselves from their cultural identity and uniqueness because of what they were known to the world once.
This standardization has left many small companies, who are promoting the cultural trends of a certain city, lose their work. Whether you are in Tokyo, London or Chicago, you will find a lot of similarities in terms of the market.
· Labor Impact
Most of these companies are operating with the main goal of gaining as much profit as they can squeeze from their world-spread chains. As profit is their main goal, they focus on reducing their costs as much as they can. Don’t be surprised if you find a huge multinational chain outsourcing their work to a country with fewer wage costs and laws for the labor.
Even though their main office may be based in countries with inflexible laws regarding employment and wages of their employees, these multinational corporations prefer setting up their factories and major production line ups in areas with people desperate to work even for a minimum wage rate. Some of these countries don’t have child labor laws hence, underage children can work for these corporations on an even lower rate.
However, this poorly trained and unskilled workforce leads to deterioration in the quality of the product or service. Multinational corporations who are offering complete training, health and salary packages to the people of a third world country; they can help millions of people live a better life.
· Tax Manipulation
Large corporations focus on cutting their production cost as well as the tax liability to increase their total profit figures. To reduce production, they focus on outsourcing but to cut the tax liability, most of these corporations choose the route of transfer pricing. Transfer pricing is a procedure where unfinished and work in progress goods are shipped to countries that offer a lower tax rate and custom charges.
Transferring the costly goods from a country where they have to pay a large sum of tax improves a company’s profit figures because paying a lower sum of tax will result in a reduction in their final taxes. Many countries are losing huge sums of income from tax because of this process.
Making tax payment stricter by enforcing policies which force the corporations to pay taxes in the countries where their businesses are registered, can help a lot with keeping the incomes in-house.
· Increase Interest Rates
With several multinational organizations being launched worldwide, banks have also decided to increase tax rates as well as some obligatory commodities have also been put afar the reach of normal citizens. Purchasing property and other necessary items have also become quite difficult for a common man as they question the heavy interest and tax rates applied on almost everything.
· Environmental Impact
Many large companies focus on cost-saving and for that, they can go further and beyond. Environment and several other life-threatening factors are eliminated considerably for the sake of profits. However, with the passage of time and awareness regarding the natural damages that can be caused due to certain production procedures, many multinational corporations are now considering eco-friendly measures of cleaning and production within their office premises
But now companies have changed their cleaning methodologies within the office premises by using green methods. If you just search up your local areas for cleaning businesses, you will notice how eco-friendly methods are the corporate rage right now.
If we consider cleaning methods, even then several factors are contributing towards the environment e.g. recycling, reducing the use of plastic, etc. With the power and financial stability that a large corporation holds, it can implement procedures and methods to save the environment and encourage their smaller counterparts to do the same.
Many large corporations offer people services and products that people cannot survive without in this world but with these products come several drawbacks that are potentially harming the society we live in. Multinational corporations focus on generating heavy sums of profits and because of that, they can go beyond a limit.
Several cost-cutting procedures like hazardous products that are relatively cheaper, reducing tax liabilities, reducing operational costs and even breaching basic labor laws are applied. If these corporations become considerate and more effective towards the basic human and environmental laws, the world we live in can surely be a better place for everyone.