Multinationals

Question 1

What is a Multinational Corporation

Answer 1

Businesses that have their headquarters in one country but operate branches in other countries

Question 2

Reasons for being a MNC

Answer 2

1) Government pursue fiscal and monetary policies to attract MNCs (infrastructure, loans, tax holiday)
2) Nearness to markets - MNCs put themselves in stratergic locations

Question 3

Advantages of MNCs

Answer 3

1) Lower transport cost of finished goods
2) Better market info regarding consumer tastes as a result of closeness
3) May be looked at as local company and gain loyalty
4) Lower production costs, cheaper rent, government grants, lower labour costs
5) Avoid import restrictions
6) Access to local natural resources
7) Avoid laws
8) Globalization

Question 4

Limitations of MNCs

Answer 4

1) Communication between hq may be poor if country lacks technology
2) Language and cultural barriers
3) Coordination and control problems
4) Training Cost
5) Loss of control