Multinational companies

Question 1

What are MNC

Answer 1

These are business organizations that have their head quarters in one country but operate branches, factories and assembly plants in other countries.

Question 2

What is the difference between GDP and GNP?

Answer 2

Gross Domestic Product measures the value of goods and services produced within a country’s borders, by citizens and non-citizens alike. While, Gross National Product measures the value of goods and services produced by only a country’s citizens but both domestically and abroad

Question 3

Advantages of MNC

Answer 3

-lower transport costs for the finished goods
-better market information regarding consumer taste as a result of closeness to them
-may be looked upon as a local company and gain customer loyalty as a consequence
-lower costs of production

Question 4

Disadvantages of MNC

Answer 4

-communication links with headquarters may be poor;
-language and culture differences with local workers and government official could lead to misunderstanding;
-co-ordination with other plants in the multi-national group will need to be carefully monitored;
-it is likely that the skills level of the local employees will be low and this could require substantial investment in training programs