The world body brings global economy into, one foundation to some extent. This may easily cause environmental degradation. The companies can just pay off government officials to protect their company from being shut down. Disadvantages of Multinational companies on Host country: The following disadvantages are faced by the multinational companies: Loss of sovereignty: Multinational companies do not take the national policies seriously. Taking into consideration pharmaceutical companies, they can easily afford to pour millions of dollars into their research and development efforts. They can create jobs and wealth. The history of the multinational is linked with the history of colonialism.
Hence, there is a threat of nationwide opposition to multinational company. More opportunities for the industry are created and this is because of the high need of materials by the corporation in the host country. Ownership and control The ownership of multinational companies remains both with the parent company and the subsidiary company. Therefore, developed countries economically exploit the developing countries through multinational companies. Businesses always seek to sell more products and services so as to bring in more revenue and generate profits for its owners.
Import restriction policy of some countries also encourages multinational companies to operate production and selling activities in those countries. Most corporations will retain the services of an attorney and accountant to help them with drafting legal documents and corporation filings and maintaining compliance with complex corporation law and regulations. The Multinational Corporation is advantageous as they best in the possessing of global marketing network and this is good as they can use this platform in the promotion of the all the exports of the host country. Multinational companies create consistent consumer experiences. They Have The Ability To Dominate The Market Due to the low costs that they can achieve and the wide arrange of labor forces they can take advantage of, multinational companies have the ability to completely dominate whatever market they are in.
Multinational companies can act in different kind of business environments. Competition: For market promotion and development multinational companies have big budgets. 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. Along with the products they also indirectly impose the culture of developed nations. Small Business Administration, about 96 percent of consumers and two-thirds of the world's purchasing power resides outside the U. The Discounted Cash Flow method is most accurate, andwidely used on Wall Street.
Establishing operations in many different countries, a multinational is able to take advantage of tax variations by putting in its business officially in a nation where the tax rate is low — even if its operations are conducted elsewhere. For this, it hires skilled and technical employees and introduce modern system of management. Free and open trade is beneficial both for multinational companies and to the host country. Moreover, in economy point of view is usually seen as economy downturn in the country itself. They are willing to gain ridiculous profits at any cost.
Multinational corporations provide local employment. But though they bring about several benefits to such nations, they also come with ethical conducts that happen to exploit the neediness of these countries. I will discuss the advantages and disadvantages of these corporations. Investment in research and development in the main reason for the success of multinational companies. Additionally, multinational companies help the host country in the development of new products and also help in reducing the operational and labour cost of the country. Local staff receives direct support from the company, but each managing director must report to the executive team which oversees the entire operation.
They are called multinational corporations because these corporations operate in more than one country at a time. Sweatshop labor is typically seen as a disadvantage to local economies. The customers of the host country are benefited by quality products in minimum cost. This reduces the need for children in families to go to work to help support the household. Multinational companies can outsource parts of the production process to developing economies with weaker environmental legislation. Factories may be set up in different areas of the world and have their business based on the import and export of raw materials, which is what is done by most of them. The amount of time necessary to create local skills that encourage high productivity levels is measured in years, not weeks or months.
Engaging in multinational operations benefits companies and their consumers. Many of the first multinationals were commissioned at the behest of European monarchs in order to conduct expeditions. As such, only large firms can undertake it by using significant amount of money and other resources. For the advantages, Firstly, multinational products and services provide the best possible standards. As a result, the host country and its entrepreneurs suffer a lot.
Without their global presence and large profit margins, they will not be able to do this. Usually a corporation will have at least a president, a secretary and a treasurer, although there can be other officers, such as vice presidents. Let us take a closer look at their pros and cons. The most money that a shareholder can lose is his investment in the corporation - the value of his stock. Sources of revenue from other countries help businesses survive periods of low domestic sales. A firm having operations spread across different geographical areas can have its production unit set up in countries with cheap labor. The fact that too many people are unemployed in a region may embolden a company to take advantage.
They keep modern technology to themselves to maintain monopoly and capture the market. Capital Outflow Various countries have different laws regarding the movement of money from foreign businesses that operate in their jurisdiction. Multinational company gives priority to efficient and up to date management system. International firms that are implanted in developing countries will also help in educating part of the population by teaching the employees the skills required for the job, making it a greater number of educated people. In this respect, education and the cultivation of new skills that correspond to emerging technologies are integral to maintaining a flexible, adaptable workforce.