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Multinationals

economics
by

Andy Ng

on 6 May 2013

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Transcript of Multinationals

Multinationals A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. Advantages of being a Multinational Disadvantages of Multinationals Examples of Multinationals: Multinational can set up their business operations in countries where the labour and raw material is cheaper, which can give them cost advantage in the international market. Advantages of Multinational to the host country The disadvantages of multinational company are as follows:- Nike It can also be referred to as an international corporation. The first multinational company was the British East India Company, founded in 1600. The second multinational corporation was the Dutch East India Company, founded March 20, 1602. Multinational have access to many markets which spreads the risk of failure. If any product may not be successful in a particular market, it might be successful in another. Multinational companies can locate their operations near the potential market which results in lower transportation cost. They bring new technology and techniques of production. Multinational companies usually provide training to their worker which results in better skills for the country’s workforce. Multinational businesses usually produce in large quantities and export to other countries which can result in valuable foreign exchange for the host country. They pay huge taxes to the government which can be used for the development of the host country. (1) High Profit Low Risk Investment: The multinational company prefer to invest in areas of low risk and high profitability. Issue like social welfare, national priority etc. have less priority on their agenda. Mostly they invest in consumer goods industry. (2) Exploitation: These companies are financially very strong and adopt aggressive marketing strategies to sale their products, adopt all means to eliminate competition. (3) Work for Self Interest: Multinational company work toward their own self interest rather than working for the economic development of host country. They are more interested in marketing of profits at any cost. EXAMPLES Adidas BMW Audi KFC Lacoste Made by: Dwayne Multinationals create employment. ANDY kovan Mayur
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