Society And Multinational Corporations

Question 1

What is a Multinational Corporation?

Answer 1

This is a company that operates in its home country,as well as in other countries around the world.

Question 2

What are the models of Multinational Corporations?

Answer 2

•centralized
•regional
•multinational

Question 3

Discuss the centralized model

Answer 3

Countries have an executive headquarters in their home country and hubs in other countries.
The executive headquarters directly manages the hubs in other countries.
The company has industries in other countries to reduce production costs.

Question 4

Discuss the regional model.

Answer 4

A company keeps its headquarters in one country and supervises a collection of offices that are in other countries.
The regional model includes subsidiaries and affiliates that all report to the regional headquarters which reports to the central headquarters

Question 5

Discuss multinational model

Answer 5

A parent company operates in their home country and puts up subsidiaries in different countries.
The subsidiaries are allowed more independence in their operations.
Each subsidiary can operate independently e.g McDonalds

Question 6

List the features of MNCs

Answer 6

•Huge assets and turnover
•international operations
•unity of control
•advanced and sophisticated technology
•professional management
•aggressive advertising and marketing

Question 7

List the reasons for being an MNC

Answer 7

•Access to lower production costs
•proximity to target international markets
•access to a larger talent pool
•avoidance of tarrifs

Question 8

What are the benefits to the host nation?(Hosting MNCs)

Answer 8

•employment generation
•automatic inflow of foreign capital
•proper use of idle resources
•technical and skills development
•improvement in standard of living
•promotion of international brotherhood and culture

Question 9

What are the costs to the host nation?

Answer 9

•danger for domestic industries
•repatriation of profits
•disregard of the national interests of the host country
•no benefit to poor people
•selfish promotion of alien culture
•danger to independence

Question 10

List the challenges of MNCs

Answer 10

•cultural differences
•different political and legislative environments
•long supply chains
•managing geopolitical and economic risks
•competition in the global market.
•currency fluctuations