Saturday, July 21, 2012

Multinational Corporations

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Multinational Corporations

Other corporations grow so large that they virtually become multinational in scope. Multinational, then, are corporations built in industrialized and powerful countries that have branches in different nations. It is in effect, a citizen of general country at one time. As such, it is subject to the laws of, and is likely to pay taxes in each place where it has operations.

How do you know if it is a MNC? Well, first, it has a manufacturing base or other form of direct investment that gives its roots in at least one foreign country. Second, when it begins to plan, organize and coordinate production, marketing, R&D, financing, and staffing. For each of these operations, the firm must find the best location. Another characteristic is that the foreign sales are 5% or more of total sales and last, they develop new products in its native country and manufactures them abroad.

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MNC have lots of advantages, and these are some of them These companies give job opportunities to many people and pay taxes that support the social services of the growing country, Multinational Corporations can introduce new technologies and learnings in governing the industry and MNC’s are big help for the small industries because of the big demand of MNC for the products and services of small companies.

If there are advantages, of course there would also be disadvantages like Small businesses will lose profit because they cannot compete with MNCs, MNCs may not share their knowledge in technology and abilities in running the industry. Local workers could only work in lower positions while the higher levels would be given to foreign workers. And last, due to power and wealth, MNC’s may influence the activities of the national and local government.

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