Company Form of Business Organisation: Multinational Corporation: Advantages and Disadvantages of Multinational Corporation

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Multinational Corporation

Multinational Corporation is one which is registered as a company in one country but carries on business in a number of other countries by setting up factories, branches or subsidiary units.

  • It also termed as multinational companies.

  • Produce goods or arrange services in one or more countries and sell these in the same or other countries.

  • Example: Hyundai Motor Company, Coca Cola Company, Sony Corporation, McDonald’s Corporation, Citi Bank, etc.

Advantages and Disadvantages of Multinational Corporation

Advantages and Disadvantages of Multinational Corporation

Advantages and Disadvantages of Multinational Corporation

Advantages of Multinational Corporation

  • Investment of Foreign Capital: It helps under-developed countries to speed up their economic development.

  • Generation of Employment: Expansion of industrial and trading activities by Multinational Corporation leads to creation of employment.

  • Use of Advanced Technology: Research and Development activities contribute to improved methods and processes of production. Thus, increase the quality of product.

  • Growth of Ancillary Units: Suppliers of materials and services and ancillary industries often grow in host countries.

  • Increase in exports and inflow of foreign exchange: Goods produced in the host countries are sometimes exported by Multinational Corporation.

  • Healthy Competition: Efficient production of quality goods by multinational corporation’s prompt.

Disadvantages of Multinational Corporation

  • Least Concern for Priorities of Host Countries: Do not take into account the priorities of developing basic industries and services in backward regions of the host country.

  • Adverse Effect on Domestic Enterprises: Tend to acquire monopoly power. Thus, many local enterprises are compelled to close down.

  • Change in Culture: Consumption habits of people as regards food and dress tend to change away from their own cultural heritage.

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