However, some companies will have difficulties to keepus with that standard - maybe it will be expensive to be an ethicalbusiness. A global shift has made considerable advantages and disadvantages on society today. In general, they are not being very good as keepers of the earth. . One of the best ways to increase the level of economic growth is to provide an inflow of capital from abroad. However, major shares of the subsidiary companies established in various countries are contributed by the parent company.
It lays emphasis on quality. The companies can just pay off government officials to protect their company from being shut down. Multinational corporations provide the developing countries around the world with the necessary financial infrastructure to achieve economic and social development. I will list in 2 separate sections the pros and cons that I have found thus far. Moreover, in economy point of view is usually seen as economy downturn in the country itself. Consumer exploitation Multinational companies enjoy monopoly in the market. Although it's undeniably good for business, there is the potential danger of operating without a reasonable concept of public interest or social policy.
In addition, new job opportunities are available for U. Although multinationals are the hallmarks of success in business, they have various disadvantages. They might exploit the workforce. Advantage: Enhanced Investment in Host Country Multinational corporations can be an invaluable dynamic force for employment as well as the wider distribution of capital and technology. They tend to disregard the national priorities of the country and protect their own interests. Maximize government revenue Multinational companies contribute more to the increment in government revenue.
Capital inflows are what Samsung Multinational Corporations contribute to the host country and this is to the advantage of the country; since, many projects are established in the country, thus increasing the returns of the country and at the same increasing the industries in the country as well Wood, 15. Influence in politics Multinational companies never think about the needs and wants of the poor people. Taking into consideration pharmaceutical companies, they can easily afford to pour millions of dollars into their research and development efforts. As a result, when a business activity been given to the. This increases the gap between the rich and the poor as there is increase in the overall unemployment of the country. Competition: For market promotion and development multinational companies have big budgets.
A large component of multinational investment in developing economies is seeking out raw materials — oil, diamonds, rubber and precious metals. Thus, multinational companies are playing an important role for the development of global economy. Advantages of Foreign Direct Investment 1. Cost Minimizer These multinational companies seek to invest in countries where the production cost is low. In addition to receiving a salary or wages for work performed, the owner may also receive a dividend or distribution on the stock that he or she owns. For instance, when visiting a country, it will be easy for you to identify that Starbucks can offer you something that you are familiar with and though this might not be the best that you can find in the area, at least, it will not be the worst either. The development of the free market economy concept at the international level helps large scale manufacturing to enter the international market without much hassles.
However, this can be a disadvantage as the small companies will not get proper chance of securing their position in the market Lamare et al. Being mainly a cultural phenomenon, tourism develops communications between different cultures. Knowledge provide competitive advantage to sustain the strengthness of the company. They capture the market by using various techniques like developing network for promotion, product differentiation, maintaining brand image and fame etc. Many of them are even found exploiting workers and natural resources without considering the economic well- being of any country. They are called multinational corporations because these corporations operate in more than one country at a time. It is seen that certain countries do not allow companies to run its operations as it has been doing in other countries, which result in a conflict within the country and results in problems in the organization.
They transmit huge profit to their parent country after the payment of necessary taxes. Another good example is oil exploration, which is both costly and risky. Inequality to staff A multinational company appoints staff both from the parent country and the host country. These countries are dependent on home country for business purposes. International cooperation Multinational companies play important role in the development of mutual cooperation among various countries of the world. Multinationals produce goods and services that adhere to the best possible standards. Superiority of Market: Multinational companies have a security of brand reputation and this is why they face fewer issues in selling their products by adapting to an effective advertising and sales promotion methods Campbell, Eden and Miller 2012.
Therefore, there is continuous threat to the host country for protection of their sovereignty and liberty. On your end, do you think they are beneficial or a big threat in countries, based on the pros and cons listed above? The disadvantage are : 1 Loss of the managerial control Once a company sign a contract to outsource all or several part of the department, the company are turning the managerial function to other company. Most Downloaded Sample of Business Law. Multinational companies also spoil the culture, tradition, honesty, habits and feelings of the people of the host country. They often abuse the environment and are typically not very careful when using their resources. The multinational companies may afford a low salary to their labor force, because in some developing. They involve in mass production and distribution activities throughout the country.
Displacement of local industries Displacement of local industries is the major disadvantages of a multinational company. Other than that small bit of advce, Good luck!!! Plus, it saves money for your customers because the company doesn't have to import the goods. Engaging in multinational operations benefits companies and their consumers. Laws A potential disadvantage that multinational companies face is that they are subject to more laws and regulations than other companies. Therefore, the parent company plays a major role in the management and control of the subsidiary companies. If your priority areas include labor-intensive manufacturing or services that require foreign management expertise, it may make economic sense to hire in the foreign country, but it is at the cost of domestic jobs. Higher Employee Morale - Compared to employees who are motivated, disengaged workers are less efficient, miss more workdays and cost organizations thousands of dollars in lost productivity.