importance and growth of multinational companies Flashcards
what is the significance of economies of scale for MNCs
MNCs can reduce the cost of a single unit by purchasing raw materials in bulk, which allows them to produce more products at lower costs
how do MNCs use marketing to grow
MNCs invest heavily in advertising, increasing consumer awareness and brand loyalty, which helps them expand from their home country to the global market
how do MNCs gain technical and financial superiority
MNCs employ qualified workers, use advanced technology, and have more resources to diversify and take risks, giving them political and economic power
what are the benefits to a business of becoming an MNC in terms of consumer base
MNCs can sell their products to a larger global consumer base, increasing sales, market share, and profit margins
how do MNCs reduce costs
MNCs benefit from economies of scale, reducing production and transport costs. They also borrow money at lower rates due to their size and influence
how does becoming an MNC improve a company’s profile
as an MNC grows, its reputation increases, making its products more recognizable and boosting global revenues and profits
how do MNCs avoid trade barriers
by setting up operations worldwide, MNCs can reduce costs and increase revenues by avoiding tariffs and other trade barriers
how do MNCs benefit from lower taxes
MNCs can establish their headquarters in countries with lower taxes, reducing costs and increasing profit margins
what benefits do MNCs provide to the host country in terms of employment
MNCs create jobs by recruiting local workers, providing training, and offering competitive wages, which increases income and employment in the host country
how do MNCs contribute to the host country’s exports
MNCs export products globally, which adds to the host country’s exports and improves its current account balance
how do MNCs transfer technology to the host country
MNCs provide technical help, training, and access to updated machinery for their suppliers in the host country
how do MNCs improve human capital in the host country
MNCs provide training, leading to increased educational and skill development in the local workforce, and governments may invest more in education to attract MNCs
how do MNCs increase tax revenues in the host country
MNCs pay taxes on their profits, increasing the host country’s tax revenues, which can be spent on economic development
what are the drawbacks of MNCs in terms of labor
MNCs may exploit labor in host countries by offering poor working conditions and low pay, especially in countries with high unemployment
how do MNCs contribute to environmental damage
MNCs can cause environmental harm by extracting resources, emitting pollution from factories, and releasing waste into rivers and lakes
