Brics

Multinational companies, based in the BRIC countries such as Tata and Gazprom, have been extending their international operations. What are the implications for business in other countries were many other BRIC firms were to follow the example of Tata and Gazprom' BRIC is an acronym for the economies of Brazil, Russia, India and China combined.  A further influx of multinationals such as Tata and Gazprom from BRIC countries will only exacerbate the problems already faced by local businesses such as: Negative effects * Multinationals are more likely to employ talented high skilled individuals and are able to pay a higher rate of pay than local firms therefore local firms will be starved of talent and resources. * By paying above average rates for employees, multinationals raise the price of labour and other resources for local firms, who will have to pay higher wages if they want to employ talented individuals than previously. * Due to the economies of scale and scope and their technological knowhow they can use this advantage like an effective barrier for local firms to enter the market and create monopoly power by destroying local competition. * Problems created in the industry as a result of mismanagement by multinationals will be borne by both them and local firms, however local businesses will bear the brunt of these effects as they are unlikely to have stringent safety plans (such as a parent company in another country) to fall back on. * Due to the superior performance of multinationals the local government might decide to increase rates in a certain industry (which the multinational would easily bear due to its size) however smaller local firms will find it difficult to operate at these higher rates, resulting in their withdrawal from the industry. However they also create positive implications for local businesses in the host country Positive effects * Multinational corporations create technological transfer by introducing new ideas, methods and techniques which allows the host country to improve productivity and catch-up with the economic development. * They also stimulate local competition which might have been stagnated previously, as new competition would mean there would be a greater need for constant innovation and further development of existing products and technologies of local firms if they are to compete in the market.