Benefits and Drawbacks of MNCs with examples

(risha) Benefits of MNCS:

click to edit

jugal drawback -lol jo

drawbacks - take profits back to their home countries

will look for profit maximization so they is great chance they will fire employees to cut cost and inc profit

may make local business run out of the market and inc market share

if it makes a lot of local businesses to run out of competition it may lead to monopoly and also it may lead to becoming price makers .

Large MNCs in developed countries place order for production with small producers. They set up joint production units with local companies, they provide money for buying new machine for faster production

click to edit

(risha) Benefits of MNCS:

Disadvantages Aarav&Aldrei

Disadvantage: MNCs disrupt industries in host countries. Domestic firms don’t have the economical power of Multi Nationals. They lack the technology, economies of scale and powerful brand names held by MNCs.
Most domestic firms lose and go out of business because of this.

Extract raw materials which the company may need for production.

jugal

They produce goods in countries with low costs such as low wages.

click to edit

(Shirin’s answers-) Benefits:

Their size and scale of operation enable them to benefit from economies of scale enabling lower average costs and prices for consumers.

Large profits can be used for research & development.

In terms of efficiency, multinational companies are able to reach their target markets more easily because they manufacture in the countries where the target markets are. Also, they can easily access raw materials and cheaper labor costs.

Examples: Apple, Microsoft, Coca Cola, Google

Some criticisms of MNCs may be due to other issues. For example, the fact MNCs pollute is perhaps a failure of government regulation. Also, small firms can pollute just as much.

MNCs may pay low wages by western standards but, this is arguably better than the alternatives of not having a job at all. Also, some multinationals have responded to concerns over standards of working conditions and have sought to improve them.

Products which attain global dominance have a universal appeal. McDonald’s, Coca-Cola, Apple have attained their market share due to meeting consumer preferences.

Drawbacks:

Monopoly power leads to higher prices.

Monopsony leads to lower wages.

Negative impact on environment.

In developing economies, big multinationals can use their economies of scale to push local firms out of business.

Outsourcing to cheaper labour-cost economies has caused loss of jobs in the developed world. This is an issue in the US where many multinationals have outsourced production around the world.

Examples (yusr)

Toyota Motor Corporation was founded in 1937 by KIICHIRO TOYODA to create the automobiles. Toyota motor corporation is a multinational corporation and it's headquarter is located in Japan. ... Toyota main aim and objective was to provide better quality and good customer services to its customer.
strategy involves developing both global and regional car models in order to compete worldwide with a full line of products. Watanabe aims to achieve his goals through a combination of kaizen (continuous improvement and kakushin “radical innovation”).

Examples (Adiba)

Produce goods nearer the market to reduce transport costs.

n====

jugal drawbacks

profit taken back to hime countries

profit insectives

may become a monopoly

Avoid barriers to trade put up by countries to reduce the imports of goods as there might be import tariffs or quotas.

Harmful for the local producers : Most of the local producers have failed to compete with the MNCs so, either they hve sold their units to MNCs or have been wiped off.

may fire employees to cut cost or inc production

Increase market share and expand into different market areas helps to spread risks and increase profits .

may just leave the host country anytime

click to edit

Will not abide all laws and look for loopholes

Benefits:Creates jobs in the area it is located in as MNC factories will require workers in order to be operational
*

Nike Nike, Inc. is an American multinational corporation that is engaged in the design, development, manufacturing, and worldwide marketing and sales of footwear, apparel, equipment, accessories, and services. Their headquarters are in Beaverton, Oregon, US and they have employed 44000 employees worldwide (2012).

click to edit

create pollution and more waste

click to edit

Remain competitive with rival businesses by expanding abroad.

Can create barriers of entry high

buy local firms and take over most of them

Gain government grants by setting up in particular countries as this would increase the GDP of the country.

click to edit

youth won't look for entering as there is a price leader

IMPORTS AND EXPORTS

• India Imports (299)

• India Exports (52)

• USA Imports (322)

• Guatemala Imports (104)

• Pakistan Imports (16)

• USA Exports (16)

• Peru Imports (15)

• Kenya Imports (13)

• China Exports (10)

• Chile Imports (10)

(sabira) benefit: 1.Local infrastructures improve with the presence of multinational corporations
2.Multinational companies offer employment opportunities at the local level
3.The import-export market is present because of multinational corporations

inc market share

click to edit

MANUFACTURING

Its manufacturing network consists of over 700 factories in 42 countries. Each product moves from 57 distribution centers across a network of 18,500 accounts and 140,000 retail stores.lklklklkklkklk

Footwear

The company was supplied by ~150 footwear factories in 14 countries

Factories in Vietnam, China, and Indonesia respectively manufactured approximately 43%, 28%, and 25% of total NIKE’s footwear

Also has manufacturing agreements with independent factories in Argentina, Brazil, India, and Mexico to manufacture footwear for sale within those countries.

Apparel

NIKE was supplied by ~430 apparel factories operating in 41 countries. China, Vietnam, Thailand, Indonesia, Sri Lanka, Pakistan, and Malaysia accounted for most of the apparel production.

Distribution Centers

Has five primary distribution centers in the US located in Memphis, Tennessee.

The company had 16 distribution centers outside the US at the end of their financial year 2014.

RETAIL The goods are sold in Southern and Western Europe, all of North America and Asia (but very few in South America and Africa). Sales are highest in Canada, USA and Europe. They sell in countries that are more affluent.

click to edit