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Multinational Company

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Bipin Palli
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7 views4 pages

Multinational Company

Uploaded by

Bipin Palli
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Multinational Company

Multinational is made up of two words, "multi" and "national". The word 'multi' refer to
'many' and the word 'national' refers to the country. Hence, The multinational
company refer to that business organization which operates its business activities in
many countries.
Features of Multinational Company
1.Large scale business: The capital of a multinational company is very large, its
assets and sales are also quite large.
2.Global operation: Multinational company operates its production and distribution
activities in two or more countries. The Parent company manufactures and sells its
products and services through its subsidiaries or branches established in different
countries. Hence, it performs its business in the global market.
3.Productive organization: Multinational company is a productive organization,
which is involved in the production and distribution of standard goods and services
at international level.
4.Advanced technology: Multinational company used advanced and sophisticated
technology for the production and distribution of goods and services at competitive
prices.
5.Mass production and distribution: Multinational company produces and
distributes goods and services in a large scale. In order to produce and distribute
goods and services in mass scale, multinational companies invest huge capital,
hire expert manpower, use advanced technology and implement aggressive
promotional strategies.
6. Flexibility:
They need to be able to change and adapt to different situations
happening around the world.
7. Technology Transfer:
They bring in new technologies from their home country and share them
with other countries where they
operate.

Advantages of Multinational Companies


1. Global Market Access:
MNCs can reach a broader customer base worldwide, expanding their
market and increasing sales.
2. Economies of Scale:
Large-scale production allows MNCs to achieve cost efficiencies, leading to
lower average costs per unit.
3. Diversification:
Multinational Companies can spread their operations across different
countries, reducing risks associated with economic downturns in specific
markets.
4. Access to Resources:
They can source materials, labor, and technology from various countries,
optimizing production processes.
5. Innovation and Knowledge Transfer:
Operating in diverse environments facilitates the exchange of ideas,
fostering innovation and knowledge transfer.

Disadvantages of Multinational Companies (MNCs):


1. Complexity and Coordination Challenges:
Managing operations in multiple countries is complex and requires effective
coordination.
2. Political and Regulatory Risks:
MNCs face risks due to changes in regulations and political instability in
different countries.
3. Cultural Differences:
Differences in language and culture may lead to communication challenges
and hinder collaboration.
4. Ethical Concerns:
MNCs may encounter criticism for unethical practices in certain countries.
5. Negative Impact on Local Businesses:
Large MNCs may outcompete or dominate local businesses, leading to job
losses and economic dependence.

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