Note on Multinational Company

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Concept of Multinational Company

Multinational companies refer to those business organizations which have their main operations in a country and subsidiary operations in many other countries. It also refers to the business organization having their headquarters in one country but operating branches, factories and assembly plants in others. Multinational companies establish a parent company in one country and subsidiaries in many countries to run the business of production, distribution or the provision of service for earning profits. For examples, Coca-Cola origins in the United States, but a worker drinks coke “Made in Nepal: to quench his thirst.”

Characteristics of Multinational Company

The following are the main characteristics of multinational company:

  • Large scale business:

Multinational companies operate globally so that its capital is also considerably large. Its assets and volume of production are also quite large. The sales turnovers of some multinational companies are much greater than the annual budget of many developing countries.

  • Productive Organizations:

Multinational companies are mostly engaged in the production of goods and services in many countries and they produce and sell goods and services in one brand name or trademark all over the world.

  • Global operation:

Multinational companies operate all over the world. They produce qualitative products in the parent company and sells its products and services all over the world.

  • Advanced technology:

In Multinational companies, they use modern scientific and advanced technology to produce goods at competitive price. For examples, the Coca-Cola Company in the USA has a unique blending formula which is inaccessible to any other companies of the world.

  • Management and control:

Multinational companies establish a parent company which has control over the management and finance of the subsidiaries operated in many countries. However, enough autonomy is given to the subsidiary companies to perform their day to day activities.

  • Monopolistic market:

Multinational companies produce high qualitative products using advanced technology and skilled workforce. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm.

Advantages of Multinational Company

source:www.slideshare.net
source:www.slideshare.net

Disadvantages of Multinational Company

The following are the demerits of multinational company:

source:slideplayer.com
source:slideplayer.com
  • Affect the local resources:

Multinational companies produce high quality of goods and services because they are financially and technically strong so that they affect the local resources.

  • Disregarded national priorities:

The multinational company usually invest their capital in profitable sectors and developed regions of the host countries as they use capital-intensive technology for the production and distribution of goods and services.

  • Gain monopoly positions:

Multinational companies can establish their subsidiaries within the large business in the host countries. The economic power of the nation fully depends on multinational companies.

  • Risk on national sovereignty:

Multinational companies are mega organizations having huge financial resources and high economic power, they may have great influence on the particular parties and government of subsidiaries.

  • Outflow of Foreign Currency:

Multinational companies bring foreign capital for investment in the host countries. They generate huge profit from their activities but profits may be sent back to the parent country rather than kept.

References:

Khanal, Soma Raj, Surendra Thapa Aslami and Sitaram Dhakal. Business Studies. Kathmandu: Taleju Prakashan, 2067.

Pant, Prem R., et al. Business Studies. Kathmandu: Buddha Academic Publishers and Distributors Pvt. Ltd., 2010.

  1. Multinational companies refer to those business organizations which have their main operations in a country and subsidiary operations in many other countries.
  2. Multinational companies operate globally.
  3. In Multinational companies,they use modern scientific and advanced technology to produce goods at competitive price.
  4. Multinational companies produce high qualitative products using advanced technology and skilled workforce.
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Very Short Questions

Multinational companies refer to those business organizations which have their main operations in a country and subsidiary operations in many other countries. It also refers to the business organization having their headquarters in one country but operating branches, factories and assembly plants in others. Multinational companies establish a parent company in one country and subsidiaries in many countries to run the business of production, distribution or the provision of service fo earning profits. For examples, Coca-coal origins in the united states, but a worker drinks coke "Made in Nepal:to quench his thirst.

Multinational companies are also called global or transnational companies. Multinational Companies are engaged in the mass production and distribution of goods and services around the world. IBM Corporation, Nestle Company, Ford Motor Corporation, Coca-cola Company etc. are the examples of multinational companies.

According to Jacoby, "A multinational corporation owns and  manages a business in two or more countries."

According to M.Z.Brook and Hill Remmers, "A multinational company is any firm which performs its main operations either manufacturing of service, in at least two countries.

In conclusion, multinational companies are usually a large corporation which produces or sells goods or services in various countries and runs their business of producing and distributing goods and services in all countries for earning profits.

The main characteristics of multinational companies:

  • Large scale business:

    Multinational companies operate globally so that its capital is also considerably large.Its assets and volume of production are also quite large. The sales turnovers of some multinational companies are much greater than the annual budget of many developing countries.

  • Productive Organisations:

    Multinational companies are mostly engaged in the production of goods and services in many countries and they produce and sell goods and services in one brand name or trademark all over the world.

  • Global operation:

    Multinational companies operate all over the world. They produce qualitative products in the parent company and sells its products and services all over the world.

  • Advanced technology:

    In Multinational companies,they use modern scientific and advanced technology to produce goods at competitive price. For examples, the Coca-cola company to the USA has a unique blending formula which is inaccessible to any other companies of the world.

  • Management and control:

    Multinational companies establish a parent company which has control over the management and finance of the subsidiaries operated in many countries. However, enough autonomy is given to the subsidiary companies to perform their day to day activities.

  • Monopolistic market:

    Multinational companies produce high qualitative products using advanced technology and skilled workforce. Because this type of market would be comprised of one supplying firm, consumers would have no choice but to purchase solely from this firm.



 

The advantages of multinational company are:

  • Transfer capital and technology
  • Provide quality goods and services
  • Create employment opportunities
  • Increase government revenues
  • Earn foreign currencies
  • Develop managerial relations
  • Increase healthy competition

The disadvantages of multinational company are::

  • Disregard national priorities
  •  Affect the local resources
  • Gain monopoly positions
  • Risk on national sovereignty
  • Dilute culture
  • Outflow foreign currencies
  • Exploit resources
  • Exploit consumers

0%
  • The business organizations having their headquarters in one country but operating branches,factories and assembly plants is called______.

    Sole Trading Concern
    Partnership Firm
    Multinational Companies
    Public Enterprises
  • __________are the examples of multinational companies.

    All
    Coca-Cola Company
    General Electronic
    Wai-Wai Noodles
  • According to_________"Any firm which performs its main operations either manufacture or the provision of service in at least two countries"

    R.N ownes
    L.H Haney
    Brook and Remmers
    Keith Davis
  • According to______"Multinational companies are corporations which have their home in one country but operate and live under the laws and customs of other countries as well".

    Brook and Remmers
    David E.Lilenthal
    R.N ownes
    Keith Davis
  • According to________"Multinational company is a large corporation with spread over several countries but controlled by a central headquarter."

    Robock and Simmonds
    R.N ownes
    Keith Davis
    A.N Agrawal
  • According to_________"A multinational corporation owns and manages business in two or more countries."

    Jacoby
    Robock and Simmonds
    R.N ownes
    Keith Davis
  • _______are the charcteristics of Multinational Company.

    Large-Scale business
    Global operation
    All
    Advanced technology
  • The Unilever limited has its subsidiaries in more than 170 countries of the world is the example of________.

    Public Enterprise
    Co-operative Organization
    Sole Trading Concern
    Multinational Companies
  • The coca-Cola company of USA has a unique blending formula which inaccessible to any other companies of the world is the example of ____________.

    Public Enterprise
    Joint Stock Company
    Co-operative Organization
    Multinational Companies
  • Which one is a characteristics of Multinational Company ?

    Gain monopoly positions
    Unfair employment
    Affect the local resources
    Global operation
  • Which one is Importance of Multinational Company ?

    Affect the local resources
    Unfair employment
    Transfer of capital and technology
    Outflow of foreign Currency
  • _________are the importances of Multinational company.

    Mobilize resource
    All
    Earn foreign currency
    Transfer of capital and technology
  • Which one is the demerits of local resources ?

    Joint Stock Company
    Public Enterprises
    Multinational Companies
    Cooperative Organization
  • _________are the demerits of Multinational Company ?

    Economic Exploitation
    Affect the local resources
    Risk on national sovereignty
    All
  • Which one isnot the demerits of Multinational Company ?

    Economic Exploitation
    Large-Scale business
    Unfair employment
    Increase dependency
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Priyanka Bohara

merits/advantages of multinational company


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keshab

importance of multi national companies


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