multinational Flashcards
what is a multinational business?
A business that has operations in more than one country. This could be worldwide retail outlets such as IKEA or just retail outlets in one country that have a production facility in another.
what are are some key aims of a multinational business?
-Most multinationals are limited companies.
-Head office is usually in the ‘home country’.
- Advantage of being a multinational
Wages and raw material costs are lower in host countries
- Advantage of being a multinational
Businesses can avoid legislation in the home county e.g the host country may not have minimum wage
- Advantage of being a multinational
Grants can be issued by host government to locate in their country
- Advantage of being a multinational
Business can avoid quotas (retraction on amount of imports/exports) and tariffs (taxes on imports/exports) issued by their own governments by producing un the country that applies the quota.
- Advantage of being a multinational
Will allow the business to have access to a wider market
- Advantage of being a multinational
Increased brand awareness
- Advantage of being a multinational
Greater economies of scale
- Disadvantage of multinationals
Language barriers can slow down communications between home and host country
- Disadvantage of multinationals
Cultural differences can affect production e.g ‘siestas’ in Spain
- Disadvantage of multinationals
Exchange rates can affect purchasing and paying expenses in different countries
- Disadvantage of multinationals
Time differences can hinder communication between head office and branches around the world. Delay decision making.
- Advantages of multinationals for host country
Create employment
- Advantages of multinationals for host country
New management styles maybe introduced which can be copied by other business organisations
