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Multinational Corporations

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Raj Na

on 4 December 2012

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Transcript of Multinational Corporations

By Rajat Nayar, Chris Eva, Romasha Sanyal, and Natalie Lim May Ern Multinational Corporations Learning Outcomes Define a HOST COUNTRY: 1. Create jobs :) Define a multinational corporation.
Discuss the reasons for the growth of multinational companies.
Evaluate the impact of multinational companies on the host country. What defines a Multinational
Corporation? A corporation that is registered in more than one country or that has operations in more than one country. It can also be referred to as transnational corporation. Why become a multinational? Multinationals and Their Effects on Host Countries Benefits of MNC's to the Host Country Summary: Multinational Corporation: A corporation that is registered in more than one country or that has operations in more than one country.
These corporations:
Bring new jobs to an area.

Are often at the forefront of new technology and introduce this to another country

Are often more efficient than local companies.
However:
They are very powerful and can influence the government of a country
Local employment can be dependent on one large employer
They may use up natural resources which may not be renewable
They can force local firms out of business An increased customer base = sale turnover
MNC's benefit from economies of scale
Possibility of avoiding any protectionist policies (tariffs, quotas, unfair trade practices)
Cheaper production costs (labour)
MNC's can spread risks
Keeping in track with globalization of markets
International brand recognition
Better infrastructure and land Any nation that allows a multinational
corporation to set up in its country. Benefits? Host country:
Malaysia Examples of MNC's? Examples of Foreign MNC's based in MALAYSIA: Clothing Brands: Oil & Gas: IT & Electronics: Shipment & Logistics: 2. Technology transfer 3. Competition Transportation: Nike has manufacturing factories in 45 countries
Factory workers: 2000 workers

Workers are paid relatively well.
Nike benefits the country's balance of payments
(the annual record of a country;s trade with other
nations) Disadvantages? Statistics:
With a strong R&D and new ideas in management thinking, Honda managed to raise the efficiency of production in Malaysia by 32%. With intense competition in the shipment industry, DHL strives to be innovative in their marketing to beat their competitors (FedEx, UPS and etc).
E.g: DHL Express
Lead to greater efficiency to the benefit of domestic customers. Advantages of Multinational Companies They bring new jobs to an area. They are often at the forefront of new technology and can bring this to another countryOften more efficient than local companiesThey can lead to the introduction of new management techniques Often export their output therefore help the Balance of Payments They can lead to new businesses being set up locally once people have learned new skills. Intel in Malaysia helped contribute to the 3000 engineering
jobs in Penang just recently. This in turn increases the
country’s Gross Domestic Product (GDP) by creating consumption expenditure as more people are in paid employment. Intel is “actively facilitating the transfer of knowledge, technology
and methodology” through tertiary education in Malaysia.
For example, they have academic and research activities
with potential engineers at University Sains Malaysia,
a local university. Local sundry shops have to compete with large, chained multinational grocery and general stores like TESCO who is branching out quite a lot lately in Malaysia = unemployment; reduce the price of their products or invest money in new technology.
Some stores will not be able to afford to do this and so eventually declare bankruptcy. Others will be weakened to the point that they would be easily subjected to takeover bids.
Some MNCs also exploit the host country’s resources and pollute their lands for example the Lynas project that the Prime Minister recently approved received a lot criticism as the foreign company fail to produce any plans to deal with the radioactive wastes that will be produced. They are very powerful and can influence the government of a country Local employment can be dependent on one large employer
They may use up natural resources which may not be renewable
They can force local firms out of business
The profit they make goes back to the ‘home’ country
They can be ‘footloose’ and may move to another country if better incentives offered. Disadvantages of Multinational Companies Examples:
Full transcript