Chapter 10 (multinational) Flashcards
Why have many companies developed into multinationals?
Because large companies can exploit economics of scales and lower costs.
What can multinationals do to suppliers?
They can put pressure on suppliers to lower their cost.
What does multinational have access to?
They have access to cheap global resources such as labor, capital and commodities.
How some firms become multinationals?
By relying on effective marketing
What is it mean by becoming multinational by relying on effective marketing?
It mean company spend heavily on advertising and use innovative marketing to grow as multinational attract customers globally.
What does multinationals have to take risks and diversify?
Sufficient resources
What are benefits of multinationals?
Larger customer base
Higher profile
Lower cost
Lower taxation
Avoid trade barriers
How can multinationals boost their sales revenues?
They can boost their sales revenues by selling more output to the global market which can help them to win larger market share and raise profit margins.
How can multinationals reduce transportation costs?
They can reduce transportation costs and locating their factories in new countries which reduce the distance from production site to market place.
What is the benefit to company if it has strong brand name and have high profile?
It encourage existing customers and attract new customers.
How can multinational bypass trade barriers?
They can bypass trade barriers by establishing operation in the country that have trade barriers in place.
How can multinational bypass trade barriers?
They can bypass trade barriers by establishing operation in the country that have trade barriers in place.
How can multinationals reduce the amount of cooperation taxes?
By basing their head offices and premises in countries where tax rates are low.
What are benefits of multinationals to a country or its economy?
Increase income and employment
Increase tax revenue
Increase exports
Transfer of technology
Improvement in quality of human capital
Enterprise development
Multinationals do not provide jobs in countries?
False
What does extra output and employment generated by multinationals do to country?
They will increase the country’s economics growth and raise the living standards of people in those countries.
How do large number of taxes pay by the multinationals can be use?
They can be used to improve government’s services.
How does increase in country’s export help country?
It helps country to increase their foreign currency reserve.
What do multinationals provide for their workers?
They provide training and work experience for their workers.
What does arrival of multinationals encourage more people to do?
It encourage more people to start business in less developed countries.
What can countries do to attract multinationals?
They spend more on education to improve the quality of human capital to attract more multinationals.
What can countries do to attract multinationals?
They spend more on education to improve the quality of human capital to attract more multinationals.
What is currency reserve?
Money in foreign currency held by country and used to support its own currency and to pay for imports and foreign debts.
What is human capital?
People and their skills
What is enterprise?
Activity of starting and running a business.
What are the possible drawbacks of multinationals to a country/economy?
Environmental damage
Exploitation of less developed countries
Lack of accountability
Repatriation of profit
How multinationals might exploit nation?
- They may encourage country to rely on producing primary products
- They often pay low wages
-They employ child labors with poor working conditions
- Taxes paid to government is minimal
- As little as possible is put back to the country to increase their profit
Why relying on one industry is bad?
Because it makes the country vulnerable.
What is the result of the repatriations of profits of multinationals?
The host country left out.
What is it mean by multinationals’ lack of accountability?
With their powerful influence they may be able to evade the law especially in countries where government is weak or corrupted.
What is repatriation?
Where multinational return profits from oversea venture to the country it is based, typically from developing country to developed country.
