Midterm Question #1
MNC's are complex organizations however, they dominate the worldwide market. Knowing the background and nature of MNC's, answer the following:1. Identify the benefits and disadvantages of MNC's.
The adverse effects of MNCs
A. Disadvantages On the home country:
1.Loss of jobs.
2.Loss of tax revenue.
3.Flexibility of operation is reduced in a foreign political system and thus causes instability.
4.Competitive advantage of multinationals over domestic firms.
On the host country:
1.Remittance of dividends and profits that can result in a net outflow of capital
2.MNCs engage in anticompetitive activities such as formation of cartels and dumping..
3.MNCs offer higher wages to its employees in the host countries,which is much more than any other domestic firm.
4.Obsolete technology may be used in the host country.
B. Possible advantages of a multinarional corporation are:
1.Multinational Companies are able to sell far more than other type of company.
2.Multinational companies can avoid transprt costs.
3.Multinationals can take advantage of different wage levels in different countries(as in some countries only women and children work, so they wages can be low)
4.Multinationals can achieve great economies of scale.
5.Multinationals have less chance of going bankrupt than small companies.
6.Multinationals can carry out a lot of research and development.
2. Identify one MNC company and describe its operation.
Emerson Electric Company, This company provides engineering services and innovative solutions for the customers in a wide range of industrial, commercial, and consumer markets.Emerson is one of the largest conglomerate companies in the United states. As of 2007, it has a workforce of approximately 138,000 employees worldwide with a global presence spanning 150 countries.
3. Describe how the parent control/coordinates with its subsidiaries in other
countries or region.
It has 50 plants in 31 countries and generates almost 65% of its revenue from .... do not seem to reflect the management style of any particular country or region. ... In other cases the parent may want to see how well the subsidiary ... rely on a variety of mechanisms to coordinate and control their subsidiaries.
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IT is maximized by Multinational Corporation especially in having an effective communication trough other country or region and also in Marketing It is very useful to reach the potential market.
5. WHat were the weaknesses/problems encountered by this MNC from its environment and global setup?
Some of the problems that a multinational company might face while recruiting to set up and expand operations in these locations, or when developing a long-term development plan in the offshored country ... ideas & research ... Technical and Policy Papers.
Debbie Ann T. Temp;onuevo
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