MNCs are beginning to look to Latin America as a major geographical locus for investment. Multinational oil and gas companies in particular are starting to take advantage of a resurgence in neoliberal governments supporting more deregulatory policies. The most significant of these companies is British Petroleum (BP), which is known for already having a notorious past of being involved in regime overthrows and environmental disasters, as well as the Norwegian multinational energy company, Equinor ASA, which has partaken in oil drilling practices in the Arctic that many environmental groups have criticized as being unethical. Executives from Equinor have announced that “30 percent of its oil output will come from the region by 2030” (teleSur, 2019). BP is looking especially towards Argentina as a major player in the future of oil and gas extraction projects. This is in large part because of the presence of the staunchly neoliberal Macri government.

Two years ago, the recently elected Macri administration revised the section of country’s Collective Labor Agreement regarding “unconventional gas extraction” as a means to foster a novel economic paradigm of “efficiency and productivity” (teleSur, 2019). A large geologic formation with large shale deposits called the Vaca Muerta (Dead Cow) is what BP is considering as the main site of the potential drilling (teleSur, 2019). This move, however, presents looming uncertainty of the integrity of the natural landscape around there. As yet, there has been no indication of any substantial interest, on behalf of BP and the Macri government, in environmental consulting. There are nature reserves on the Chilean side of the border close to Vaca Muerta that very well could be affected by the expansion of these new projects. Again, oil MNCs like BP have not had a good record on environmental concerns, so unless some sort of regime is put into place, there is no telling what might happen to that area in the near future. On top of that, as per Macri’s push towards a multi-billion dollar loan with the IMF while salary increases have stagnated, there has been an immense increase in general strikes (Al Jazeera, 2018).

There is no doubt that Latin America is following the much of the world in becoming more amicable with MNCs, but it seems as though the living conditions of everyday people are not being considered as much. Moreover, neoliberalism in Latin America has a history of slowing down overall growth, but political elites are convincing voters that time will be different because other nations are also cosying up to them. Nonetheless, as with the case of Argentina, worker strikes will proliferate while this dynamic takes place, which shows that prioritizing shareholders’ interests is not a sustainable political motive.

Al Jazeera. (2018). Workers paralyse Argentina in third general strike. Retrieved from
aljazeera.com.

TeleSUR. (2019). Amid Surge in Neoliberalism, Oil Giants Prey on Latin America.
Retrieved from telesurenglish.net.

For the past 15 years, Elon Musk has built Tesla from a small electric vehicle (EV) startup to becoming a $46 billion company and the forerunner in the EV industry. However, despite their massive success in American and European markets, Tesla is yet to see a breakthrough in the Chinese market. China’s EV industry has grown rapidly in the previous years, producing more than half of global electric vehicles in 2018, while the US only produced 20 percent. The Chinese government has taken initiative in growing this market, providing over $60 billion in direct subsidies since 2012 to lower the cost of electric vehicles for Chinese consumers. Currently China is definitely the biggest market for EV’s, and for Tesla to succeed it is necessary to establish its presence in the country.

The biggest problem that Tesla faces in China is that its products are extremely expensive relative to its competitors due to transport costs and large import taxes which has been worsened by the trade tensions between the US and China. For example, a Tesla Model S that runs for $80,000 in the US will cost around $140,000 in China after taxes. In comparison, local EV companies in China sell their cars for as low as $10,000-$20,000, a sizable difference that makes it nearly impossible for Tesla to compete against.

Tesla is desperate in tapping the Chinese EV market and is aware of the problems they face, that is why they have worked towards building a Gigafactory in Shanghai in order for them to be more competitive in the domestic market. Once they are able to produce their cars domestically, Tesla will be able to establish a local supply chain, become eligible for EV tax credits provided by the government, and more importantly, evade the costs of duties and tariffs that have been inflating the prices of their cars.

Tesla’s case in China is a textbook example of the Tariff-Jumping Hypothesis. Musk believes that the biggest obstacle to Tesla’s success in China is affordability, and the only was to access the massive demand in the country is by producing domestically to make their products affordable. By doing this, Tesla is able to avoid tariff barriers and dramatically reducing the costs of their cars, making them more competitive against local EV manufacturers.

References:
Collins, J. (2019, March 05). Tesla’s Problems In China Highlight Its Biggest Threat: Negative Working Capital. Retrieved from https://www.forbes.com/sites/jimcollins/2019/03/05/teslas-problems-in-china-highlight-its-biggest-threat-negative-working-capital/#7c132c2b2b3c

Kolodny, L., & Evers, A. (2019, February 12). Tesla is staking its future on China – here’s what it’s up against. Retrieved from https://www.cnbc.com/2019/02/11/tesla-faces-steep-competition-in-china.html

Disasters keep on affecting people and families around the world. While some are natural disasters, others are man-made. This is apparent in the BP Gulf Coast oil spill, a preventable man-made catastrophe. From April to July 2010, in excess of 185 million gallons of unrefined petroleum spilled into the Gulf Coast. This crushed the indigenous habitat including wild life and the lifestyle for Gulf Coast people group. As a corporate realm speaking to the biggest oil organization on the planet, BP must be practice dependable business morals. This is the exercise learned for BP. It is likewise the exercise learned for government and endeavor with respect to essential precautionary measures against wellbeing. Security turns into a key topic in preventable fiascos. By executing methodologies in security BP can improve social duty, ethical strategies, and ecological effect of unrefined petroleum extraction and refinery.

Safety is a key strategy to address issues of social and moral obligation. Not only BP ought to improve security practices, the legislature should screen these safety procedures. It attempts to decrease hazards and limit dangers. This isn’t just basic to avert mishaps it is additionally a principal system for business progression. The raw petroleum that spilled into the Gulf and destroyed the earth speaks to a considerable misfortune in oil supply and benefits. Furthermore, BP lost specialists, hardware, stock, honesty, and open regard. Taking basic measures to improve security and diminish dangers to coherence is proposed by experts and researchers around the world. Be that as it may, BP neglected. They give an exemplary case of what can happen when to associations dismiss security, morals, and social duty.

“BP – The Cost of Ignoring Corporate Social Responsibility.” Cara MacMillan. Accessed April 05, 2019.

“BP Leak the World’s Worst Accidental Oil Spill.” The Telegraph. August 03, 2010. Accessed April 05, 2019.

Evaluating the opportune moment to scale up a business is essential but equally paramount to the success of a business operation is knowing when to scale down. The case for multinational companies operating out of Venezuela – a country despite having the world’s largest oil reserves, has an economy in complete shambles – is a great example of this quandary. This has been exacerbated by recent U.S. economic sanctions which prohibits any American institutions from lending more money to Venezuela. MNCs such as Clorox, Kimberly-Clark, General Motors, Harvest Natural Resources and General Mills have removed their operations from Venezuela entirely, abandoning their assets or selling them for cheap. While walking away from an unpredictable landscape is often regarded as the safe choice, these cases are also where high risk, high reward opportunities could be hidden.

MNCs that have chosen to remain in Venezuela are slowly scaling back their operations due to a scarcity of raw materials and decreased demand for their goods and services. This is complicated by strict labor laws in Venezuela that forbid mass layoffs. MNCs usually work around this by giving many of their employees a paid leave of absence or incentivizing their voluntary termination. With reduced schedules and cutbacks in production as well as a limited selection available in the market, Colgate, Ford, Johnson & Johnson, Fiat Chrysler are among 150 other MNCs that have stayed back in Venezuela. In certain instances, these companies have attempted to support their employees and provide assistance.

Other places in Venezuela, MNCs have struggled to adapt to other government commands, including strict cost guidelines on products and services that the Venezuelan government deems as necessities such as milk and soap. The prices cannot keep up with constant inflation. Colgate recently adapted to this with the production of a price-controlled toothpaste that is packed in brown cardboard that is more cost-effective than its normal red packaging.

If Venezuela ever were to recover from its current economic frenzy, the MNCs that have continued to be present there will be in position to benefit strongly. The ability and freedom to adapt to changing circumstances of a high-stakes economic landscape are dominant.

Bibliography:

Valerio, Pablo González AlonsoAlejandro. “When Should Multinationals Move Back into Venezuela?” Harvard Business Review. September 01, 2017. Accessed April 04, 2019.

Pons, Corina. “From Unilever to Ford, Companies in Venezuela Cling on by Cutting…” Reuters. August 31, 2018. Accessed April 04, 2019.