MNCs

MNCs

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  MULTINATIONAL CORPORATION
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  2 Meaning of MultinationalCompanies (MNCs): A multinational company is one which is incorporated in one country (called the home country); but whose operations extend beyond the home country and which carries on business in other countries (called the host countries) in addition to the home country. It must be emphasized that the headquarters of a multinational company are located in the home country. A multinational corporation is known by various names such as: global enterprise, international enterprise, world enterprise, transnational corporation etc.
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  3 Features of MultinationalCorporations (MNCs) (i) Huge Assets and Turnover (ii)International Operations Through a Network of Branches (iii)Unity of Control (iv)Mighty Economic Power (v)Advanced and Sophisticated Technology (vi)Professional Management (vii)Aggressive Advertising and Marketing (viii)Better Quality of Products
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  4 Advantages of MNCsfrom the Viewpoint of Host Country (i) Employment Generation (ii) Automatic Inflow of Foreign Capital (iii)Proper Use of Idle Resources (iv)Improvement in Balance of Payment Position (v) Technical Development (vi)Managerial Development (vii)End of Local Monopolies (viii)Improvement in Standard of Living (ix)Promotion of international brotherhood and culture
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  5 Limitations of MNCsfrom the Viewpoint of Host Country (i) Danger for Domestic Industries (ii) Repatriation of Profits: (Repatriation of profits means sending profits to their country) (iii)No Benefit to Poor People (iv)Disregard of the National Interests of the Host Country (v) Misuse of Mighty Status (vi)Careless Exploitation of Natural Resources (vii)Selfish Promotion of Alien Culture (viii)Exploitation of People, in a Systematic Manner
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  6 Advantages from theViewpoint of the Home Country (i) MNCs usually get raw-materials and labour supplies from host countries at lower prices; specially when host countries are backward or developing economies. (ii) MNCs can widen their market for goods by selling in host countries; and increase their profits. They usually have good earnings by way of dividends earned from operations in host countries. (iii)Through operating in many countries and providing quality services, MNCs add to their international goodwill on which they can capitalize, in the long-run.
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  7 Limitations from theViewpoint of the Home Country (i) There may be loss of employment in the home country, due to spreading manufacturing and marketing operations in other countries. (ii) MNCs face severe problems of managing cultural diversity. This might distract managements’ attention from main business issues, causing loss to the home country. (iii)MNCs may face severe competition from bigger MNCs in international markets. Their attention and finances might be more devoted to wasteful counter and competitive advertising; resulting in higher marketing costs and lesser profits for the home country
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  8 Thanks!!