What would you like to do?
What are the advantages and disadvantages of multinational businesses?
Multinational Business The advantages of a multinational business to host countries are:
Advantages to home countries
- Transfer of technology,capital and entrepreneurship.
- They increase the investment level and thus the income and employment in the host country.
- Greater availabilty of products for local consumers.
- Greater access to high quality managerial talentwhich tens to be scarce in host countries.
- Increase in exports and decrease in imports,thereby improving the balance of payment of host countries.
- Help in equalizing of cost of factors of production around the world.
- They provide an efficient means of integrating economics.
Advantages to home countries
- Acquisition of raw material from abroad,which is cheaper in cost.
- Technology and management expertise accquired from competing in global markets.
- Export of components and finished goods for assembly or distribution in foreign markets.
- Inflow of income from overseas profits,royalities and management contracts.
- Jobs and career opportunities at home and abroad in connection with overseas opportunities.
- Trade restrictions imposed at the government-level
- Taxes or tariffs imposed on imports from other countries
- Limited quantities (quotas) of imports
- Effective management of a globally dispersed organization
- Slow down in the growth of employment in home countries.
- Destroy competition and acquire monopoly.
- Technology designed for mnc's is for world wide profit maximization not for the social welfare or development of economy.
- They could cause fast depletion of some of the non renewable natural resources in the host country.
- In order to alley the fears of host countries they need to:
- provide employment
- train managers
- provide products and services that raise the standard of living
- introduce and develop new technical and managerial skills
- increase productivity
80 people found this useful
Was this answer useful?
Thanks for the feedback!
Advantages of a Multi-National Business Entering a Mature Market There aren't many. A mature market economy, by definition, is one that has been around long enough to m…eet the needs of its consumers. For a multinational business (MB) to enter a market that has its needs already met is problematical. The advantages are whatever -internal- advantages the companies products and services offer. If the MB has lower costs and a lower sales price for similar goods then they have cost advantage, if more features or expanded product lines, then these. In short, just being "multinational" is of no real advantage in a mature market.
\n. \n Advantages of a Multi-National Business \n. \nThere are many emerging economies that are rip to be tapped. Americans have several options on all products, where …some foreign lands do not. In essence, you would have a monopoly. Also other nations do not have as strict regulations (EPA in particular) as America. Therefore, you could produce/sell the product in a different nation and it would cost less to manufacture and you could sell more to a larger market.
Advantages: training of local labor with more sophisticated techniques which, in the long run, will bring external benefits to the host country when these techniques can be us…ed in all economic sector.raise the growth rate of the host nation by introducing new investment and new technology.induce their local rivals to become more innovative and competitive.promote improvement or development to various supporting industry or complementary industries contributions of taxation, plus providing the host country with foreign exchange that can be used to purchase vital imports. Disadvantages: Multinational companies may enjoy high competitive advantages over local firms that can destroy local competition rather than promote it.they can require their subsidiaries to operate polices that may be inefficient, or create distortion in the local market they may misuse the environment they may create uncertainty; foreign firms control the country within it by controlling part of its industries.they may not promote any development for the nation's economic activities by simply sourcing their components from abroad. The result of this is that they could drive local producers out of business.avoid tax by practicing transfer pricing.
advantages could be: * training of local labor with more sophisticated techniques which on the long run will bring external benefits to the host country when these tech…niques can be used in all economic sector. * raise the growth rate of host nation by introducing new investment and new technology. * induce their local rivals to become more innovative and competitive. * promote improvement or development to various supporting industry or complementary industries * contributions of taxation, plus providing the host country with foreign exchange that can be used to purchase vital imports. the disadvantages are : * MNC may enjoys high competitive advantages over local firms that can destroy local competition rather than promote it. * they can require their subsidiaries to operate polices that may be inefficient or create distortion in local market * they may misuse the environment * they may create uncertainty because foreign firms control the country within it by controlling part of its industries. * they may not promote any development for the nation's economic activities by simply source their components from abroad. which means the tey will drive local producers out of business. * avoid tax by practicing transfer pricing.
Disadvantages Resources are limited financing available for growth is not sufficent Advantages Resources areused efficently adopts new tehhnologies quickly
There are a few Advantages are also associated with multinational businesses - The investment level, employment level, and income level of the other countries increases …due to the - operation. - The domestic traders and market intermediaries of the other countries gets increased business from the operation. There are a few Disadvantages are also associated with multinational businesses - Their profits out of the other countries in Dollars that causes a reduction in foreign reserves for other countries - Increase the dependence of the other countries on their parent countries that may affect the foreign policy of other countries.
One advantage to a business hierarchy is the fact that employees will always know who they will report to. A problem associated with a business hierarchy is the fact that …it can take to long to have a decision about any particular problem.
Regulatory and Record keeping Requirements-Corporate operations are governed by local, state, and federal regulations to a greater degree than are other businesses. * Added …Cost of Doing Business-Regulatory and record keeping guidelines and requirements often make it necessary for corporations to make additional investments (in accounting staffing, etc.) devoted to seeing that those legal requirements are met. In addition, there are fees associated with incorporating that business partnerships and sole proprietorships are not subject to. * "Double" Taxation-People who are owners of a corporation, and who also work as an employee of the business, can receive financial compensation in two different ways. In addition to receiving a salary or wages for work performed, the owner may also receive a dividend or distribution on the stock that he or she owns. Any distribution of income to stockholders via dividends is taxable, however, if the corporation is organized as a "C corporation." This is sometimes called "double taxation" in recognition of the fact that such income has in reality been taxed twice, first when the corporation paid taxes on its profits, and secondly when the dividends were distributed. Companies that register as an "S corporation," however, are able to avoid this added tax. * Separation of Finances-While incorporation provides significant protection of owners' personal assets from repercussions of business downturns, it also means that a business owner is not allowed to tap into the corporation's account for assistance in meeting personal debts.
The advantage of multinational companies to the host country is the sharing of knowledge and technology with the host country. The disadvantage is that they provide costly… services to the local consumers.
try these search results http://www.google.com/search?q=advantages+and+disadvantages+to+sole+proprietorship&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&clien…t=firefox-a
advantages: you can make much more money with two heads and then you can kill him off to double up. disadvantages: if you take to long to kill him he'll kill you first
advantages could be: training of local labor with more sophisticated techniques which on the long run will bring external benefits to the host country when these techniques c…an be used in all economic sector.raise the growth rate of host nation by introducing new investment and new technology.induce their local rivals to become more innovative and competitive.promote improvement or development to various supporting industry or complementary industriescontributions of taxation, plus providing the host country with foreign exchange that can be used to purchase vital imports. the disadvantages are :MNC may enjoys high competitive advantages over local firms that can destroy local competition rather than promote it.they can require their subsidiaries to operate polices that may be inefficient or create distortion in local marketthey may misuse the environmentthey may create uncertainty because foreign firms control the country within it by controlling part of its industries.they may not promote any development for the nation's economic activities by simply source their components from abroad. which means the tey will drive local producers out of business.avoid tax by practicing transfer pricing.
There are both advantages and disadvantages to business ethics, but mostly are advantages. The advanatages are the company will have an increase in reputation, more emp…loyees will enroll in the company, employees feel more motivated to work, customers have more trust in it. However, some companies will have difficulties to keep us with that standard - maybe it will be expensive to be an ethical business.
I currently own a family business. I will list in 2 separate sections the pros and cons that I have found thus far. Pros - You can make your own hours. You can write off j…ust about anything as "business related" I.e. - clothes (uniforms) Gas - (travel expenses), Hotels (travel expenses), Need cash? (Pay yourself contract labor for "Mowing the premises") Pretty much anything, us your imagination. Just don't get greedy!!! That is how you get caught! :P You can choose your own team of people. All of this means more family time, and more money in the bank. Isn't this what we are all looking for? Cons : Government, government, and government. Evn if you own your own business the government wants to get their little taste. And by "little" taste I mean anything that they can get their greedy little hands on. You hav etbe careful because expenses turn into taxes and taxes turn into taxes and then after all of that is said and done, you have to pay taxes. Most people do not realize how bad the government is on small business owners until they own their own. Just be careful and cut whatever corners you can, especially in the beginning. Most new businesses fail in the first few years because they see the money coming in and go crazy in spending. Then at the end of the year when uncle sam wants his money, they don't have it. Another thing to be wary of is the old, "I own it so i don't have to work" attitude. This could not be farther from the truth. Your business WILL fail without your involvement. I only recommend this for people with a decent amount of liquid assets, and the knolwedge to be able to keep up with all of the paperwork. Other than that small bit of advce, Good luck!!! :)
Advantage: You get money. Disadvantage: You lose money.
As a business owner, or someone looking to purchase a business, a valuation is incredibly, well, "valuable". Everything else in our lives seems to have a price, but so oft…en small business owners have no idea how much their businesses are worth. A good business valuation can be useful in tracking the success of a business over time, securing a loan, dealing with investors, satisfying an owners curiousity, and is a necesity if you are looking to sell or aquire a business. The disadvantages are obvious, in that the valuation is purely theoretical, and a business is only worth what someone will pay for it. I had my business valued by EZaluate.com and found the valuation to be extremely precise and wound up selling for only $3000 more than they said the business was worth. It's all about finding the right valuator, and ensuring that they use the right method. The Discounted Cash Flow method is most accurate, and widely used on Wall Street.
Advantages: beter trade items, more varied economy, and surplus of food Disadvantages: need for a more organized gvt. System