The Impact Of MNC’s On Supply Chain Management On Brazilian Small And Medium Enterprises: What Role For Corporate Social Responsibility?
The Impact Of MNC’s On Supply Chain Management On Brazilian Small And Medium Enterprises: What Role For Corporate Social Responsibility?
This article looks into the impacts of multinational companies on developing countries’ economics. It focuses on the interaction of the multinational companies with small and medium sized enterprises in the developing countries. It talks about the impacts of supply chain decisions of multinational companies on the small and medium sized enterprises. The article states three aspects of international dealings, i.e. corporate social responsibility, global value chain and collaborative supply chain. In corporate social responsibility, the article points how CSR in MNC’s impacts on the developing countries economies from the perspective of SMEs in such countries.
Small and medium sized enterprises are the main contributors to the economies of developing countries. The article notes that corporate social responsibility of multinational corporations results into positive externalities, which create as favorable climate for the expansion of small the small sized business. The areas of social responsibility include the environment, social and labor standards. The article goes ahead and analyzes the Brazilian steel industry to provide an insight of impacts of MNCs on SMEs in developing countries. Strict adherence of multinational corporations to environmental laws in developing countries is a positive gesture to the countries’ economies. It provides an incentive to growth because lack of pollution to the environment cuts down disease incidence in the countries.
The SME’s, in the countries, in turn have healthy labor force, and, as a result, there is high production and an increase in economic growth, in the countries. A collaborative supply chain realizes the position of SMEs in the countries. The relationship between the multinationals and the SMEs in the developing countries is that of large buyers and small suppliers. The article that MNC’s should create favorable terms of trade with the SMEs to create a favorable climate for economic growth in developing countries. The article notes that often, the interaction of the multinationals with the SMEs is not beneficial for the SMEs; this is so because of the fierce markets for the SMEs created by the multinationals; competition from the MNC’s limits integration of the small and medium sized corporations into the supply chain. The case study on the Brazilian steel industry shows the disfavor that is with the SMEs in the international operations perspective. The multinationals have high bargaining power which they use to eliminate the small and mediums sized enterprises in the developing countries from the supply chain.
The large scale organizations shun supply from the small enterprises through emphasis on high quality, favorable prices delivery times. SMEs operate in the small scale, due to this, majority of the enterprises are unable to meet the demands of the multinationals and, therefore, their participation in the supply chain is inexistent. The case study, however, indicates that some multinational companies buy from SMEs not due to their effectiveness in the supply chain but as part of their corporate social responsibility in the countries of operations. The article postulates that the impact of the over eighty thousand multinationals is negative to economic growth in the developing countries. This is because the small and medium sized enterprises are the main contributors to economic growth in developing countries. The relationship between MNC’s and SMEs plays a paramount role to economic growth in developing countries, Cabral (2010).
Work cited
Cabral, D.F. The impact of multinational companies’ supply chain on Brazilian small and medium enterprises: What role for corporate social responsibility? (2010)
Is this your assignment or some part of it?
We can do it for you! Click to Order!
