1. Identify the benefits and disadvantages of MNC's.
Answer:
Benefits:
A multinational company has branches in may countries. Ford and Sony are examples.
Multinational companies do bring some benefits to developing countries. They provide jobs and increase the wealth of the local people. The country gains some wealth by way of taxes.
However, there are some problems as well. The jobs are often low-skilled and poorly paid. Much of the profit will go out of the country, and the company may pull out to relocate in a country where it can make a greater profit. Multinational companies are primarily interested in making profits for their shareholders. Paying wages is an expense that the company will try to reduce to as low a level as possible.
Disadvantages:
If multinational companies provide employment, infrastructure development and growth in economies, then on the other hand, there are various disadvantages of multinational companies. Firstly, multinational companies can severely impact the local industries because it increases the competition in the economy. Secondly, multinational companies can negatively impact the culture of the economy. Thirdly, because of the trade restrictions the multinational companies can face various problems. The availability of resources are limited in an economy and when multinational companies are opened then resources can get scarce. Moreover, though a company can grow because of investments brought by multinational companies but still the economies can grow more if the local investors make these investments.
2. Identify one MNC company and describe its operation.
Answer:
Multinational companies developed into competitive forces in the world economy. The focus of the operations of multinationsl corporations is on the coordination of the allocation if resources in tis international operations in order to minimize production cost and maximize revenue. However, before compsnies can operate as multinational businesses,these firms also have to develop market-entry strategies to become competitive forces in a foreign economy. Thre are different strategies that multinstional corporations may utilize to enter into a foreign market entry are either marketing or operational. Marketing entry atrtegies include franchising,joint venture and foreing direct investment. After all these considerations, the multinational company can now concern itself with building a business structure, actual production,direct marketing as wellas financial planning
3. Describe how the parent control/coordinates with its subsidiaries in other countries or region.
Answer:
A transnational, or multinational, corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in one or more other countries. The subsidiaries report to the central headquarters. The growth in the number and size of transnational corporations since the 1950s has generated controversy because of their economic and political power and the mobility and complexity of their operations. Some critics argue that transnational corporations exhibit no loyalty to the countries in which they are incorporated but act solely in their own best interests.
U.S. corporations have various motives for establishing a corporate presence in other countries. One possible motive is a desire for growth. A corporation may have reached a plateau meeting domestic demands and anticipate little additional growth. A new foreign market might provide opportunities for new growth.
4. How is IT maximized or used by this MNC?
Answer:
Another concern with transnational corporations is their ability to use foreign subsidiaries to minimize their tax liability. The Internal Revenue Service (IRS) must analyze the movement of goods and services between a transnational company's domestic and foreign operations and then assess whether the transfer price that was assigned on paper to each transaction was fair. IRS studies indicate that U.S. transnational corporations have an incentive to set their transfer prices so as to shift income away from the United States and its higher corporate tax rates and to shift deductible expenses into the United States. Foreign-owned corporations doing business in the United States have a similar incentive. Critics argue that these tax incentives also motivate U.S. transnational corporations to move plants and jobs overseas.
5. WHat were the weaknesses/problems encountered by this MNC from its environment and global setup?
Answer:
Most of the big problems with multinationals occur in the developing world. In the 1990s, as the backlash against globalization and corporate power gained strength, the OECD launched two new efforts: one, to revise the existing Guidelines for Multinational Enterprises, and two, to sponsor negotiations over a comprehensive and enforceable MAI. The MAI would lie out such principles as national treatment for foreign investment, protection of property rights, and arbitration requirements. It was a complicated document full of trade-offs to protect the interests of different industries and countries, and it garnered only weak support among the member governments. A loose coalition of environmental, human rights, and anti-corporate organizations put the final nail in the coffin of the proposed MAI by mobilizing energetically against an agreement that they argued protected the rights of corporations without paying equivalent attention to their responsibilities.
Cite your reference:internet
by:Wilma Son
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