But a multinational company provides access to jobs around the world, in many cases. Advantages of Foreign Direct Investment 1. Sources of revenue from other countries help businesses survive periods of low domestic sales. We all are quite aware of the bottom line of any business. This also causes many workers lose their jobs and unable to sustain their life and it is protracted the whole economy of one country. They produce goods and services of a specific nature both in the parent company and the subsidiary companies in various countries. They have the necessary skill and expertise to sell their products at international level.
There is no capitalization of reserves. Because in a foreign country, Since consumers are willing to spend their money on only the best products, the multination companies need to keep the strong competitive then they must to produce good goods. They often tend to exploit the host countries to make the most out of their host country. Conclusion- about how multinational corporations are beneficial to the world. International companies, for instance, draw criticism for employing workers at low wages and falling short of sound social responsibility performances.
This is one of the prime advantages of offshore outsourcing to make the company operation cost-effective. Multinational companies have good financial resources as compared to host countries. Tech in Electronics and Instrumentation. For the advantages, Firstly, multinational products and services provide the best possible standards. Many countries impose taxes called duties or tariffs on imports and exports, making it more costly to sell goods to consumers in other countries. Inappropriate technology Technology transfer to the host country is one of the parts of a multinational company. In the name of profit, multinational corporations commonly contribute to pollution and make use of non-renewable resources, which can pose a threat to the environment.
Works Cited Asakawa, Kazuhiro, and D. Journal of International Business Studies, 45 8 , pp. The customers of the host country are benefited by quality products in minimum cost. But, it charges a high price for the finished products by using its own brand name. Though tourism leads to economic development in the country, it may also lead to environmental degradation and deforestation. However, the disadvantage is the destruction of local jobs, markets and forced movement of people. John Stith Pemberton is pharmacist who invented formula for the most popular product Coca-Cola in 1886 in Columbus, Georgia.
Maximize government revenue Multinational companies contribute more to the increment in government revenue. Ownership and control The ownership of multinational companies remains both with the parent company and the subsidiary company. Where foreign management expertise is needed e. It is particularly essential for those industries that carry extremely high fixed costs, like airlines and car manufacture. Environment Threat For the sake of profit, these global companies commonly contribute to pollution as well as make use of the non-renewable resources that can be a threat to the environment. Advanced Technology Advancement in modern science and technology is one of the major features of a multinational company.
These partners usually have already established large international network and they have knowledge of the foreign market, purchasing practices and government regulations, which is very helpful Stock J. The parent company uses its own technology, brand, trademark and method of production. Do you think they are beneficial or only a big threat in countries? Marketing professionals might collaborate with peers in each country, for instance. It hires higher level authority from the parent country and their remuneration, allowances and other facilities are also high. The 5 Cons of Multinational Corporations This time, take a look at the disadvantages linked to multinational corporations: 1.
Secondly, multinational corporations play a big role in creating employment in the foreign countries. This increases the gap between the rich and the poor as there is increase in the overall unemployment of the country. Companies often enjoy cheaper labor and lower cost of product parts, which in turn enables larger production volumes. Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. This is one of the perks that smaller companies do not enjoy.
. A stock split is similar to a bonus issue from economic point of view. This is particularly important to industries that carry extremely high fixed costs, such as car manufacturers and airlines. As the world has become more globalized, more Americans work for multinational organizations. These presidents symbolize the United States ideals: Washington standing for independence; Jefferson for democracy; Lincoln for equality; and, Roosevelt for the role in world affairs.
They involve in mass production by taking the scope of distribution at the international level. In most cases, the home country is a developed country and the host country is a developing nation. They are called multinational corporations because these corporations operate in more than one country at a time. These companies include many large retailers, such as Nike, Reebok and Walmart. There is always security when you know what you can expect for. By utilizing labor in parts of the world where the low cost of living does not require high wages for production, these companies can keep consumer costs down. Businesses that conduct operations and sell to customers in multiple countries are considered multinational firms.
Research and investigation help discover new knowledge and ideas. Efficient management Efficient management is one of the main reasons for the successful operation of a multinational company. Thirdly, the growth of multinational companies in those countries will increase level of industrial and economic development. The analysis showed that sales were the same at 750,000 as well as the direct material, direct labor, and manufacturing costs totaling 392,000. When a multinational company makes investment in the host country, the ratio of investment has the likelihood of increasing. These local companies hard to survive.