How do MNCs control production in other countries?

How do MNCs control their production in other countries?

(i) MNCs set up offices and factories for production in regions where they can get cheap labour and other resources. (ii) This is done so that the cost of production is low and the MNCs can earn greater profits. (iii) At times, MNCs set up production jointly, with some of the local companies in these countries. (iv) Its twin benefits are-they can provide money for additional investments like buying of new machines for faster production and MNCs might bring with them the latest technology for production. (v) The most common route for MNC investments is to buy up local companies and then to expand production. MNCs with huge wealth can quite easily do so. (vi) Large MNCs in developed countries place orders for production with small producers. Garments, footwear, sports items, are examples of industries where production is carried out by a large number of small producers around the world. (vii) The products are supplied to the MNCs which then sell these under their own brand names to the customers.

What are mnc's?

MNCs are companies that manage production or deliver services in several countries.

What is the Importance of mncs in India?

to increase the employment and get the technology from other countries and give the products to all countries

Role of MNCs in globlisation?

One of the many roles MNC's play in globalization is to control production in more than one country.

What the objective of mnc?

OBJECTIVES1. MNCs have managerial headquarters in home countries, while they carry out operations in a number of other (host) countries.2. A large part of capital assets of the parent company is owned by the citisens of the company's home country.3. The absolute majority of the members of the Board of Directors are citisens of the home country.4. Decisions on new investment and the local objectives are taken by the parent company.5. MNCs are predominantly large-sized and exercise a great degree of economic dominance.6. MNCs control production activity with large foreign direct investment in more than one developed and developing countries.7. MNCs are oligopolistic in character. It is sustained by modern technologies, management skill, product differentiation and enormous advertising.8. MNCs are not just participants in export trade without foreign investments.

How are MNCs and the WTO similar?

MNCs (multinational corporations) and the WTO (World Trade Organization) are similar in that they both operate across borders. MNCs engage in business activities in multiple countries, while the WTO is an international organization that promotes and regulates global trade. Both MNCs and the WTO play a significant role in facilitating the movement of goods, services, and investments on a global scale.

What are some corporations called multinational corporations?

Multinational corporations (MNCs) are companies that operate in multiple countries, managing production or delivering services in more than one nation. Examples include well-known firms like Apple, which designs products in the U.S. but manufactures them in various countries, and Coca-Cola, which sells its beverages globally. Other notable MNCs are Toyota, Unilever, and Microsoft, all of which have significant operations and market presence across different regions. These corporations leverage global resources and markets to enhance their competitiveness and profitability.

What are the types of MNC?

It is a corporation/business entity/enterprise that manages production establishments or delivers services in at least two countries. There are three types of MNCs. They are: Horizontally integrated multinational corporations. Vertically integrated multinational corporations. Diversified multinational corporations.

It has been said that MNCs often introduce new efficiency oriented management practices What can developing host country learn from the MNCs in this respect?

Answer. Multinational Corporations' have played a significant role in thedevelopment of poor countries. Be it introducing best management practices,help in improving productivity, making local people become competitive orimproving the quality of life of people, the contribution of MNCs has beenpraiseworthy. The management style of MNCs' are different with respect todomestic management style.MNCs are known for their efficiency-oriented management systems. When MNCsoperate in a developed host country, the influence on the management practicesof the host country is often positive. This occurs due to the interaction which can bedescribed as "cross-fertilisation" between the two sets of practices. Theinteractionmay bring about improvement in management technologies and practices.In the context of developing countries, MNCs most often introduce newefficiency-oriented" management practices. Thus a developing host country can learn a,good deal from the MNCs in this respect.MNCs Business CultureOne of the major areas of controversy is the impact of MNCs on host countries'culture. This has several dimensions which we shall discuss:Market Promotion and Advertising: It is known that MNCs rely heavily onadvertising and market promotion to retain and enhance their market share. These advertisements and market promotion techniques very often have theirbasis in the advertisement and market promotion techniques and approachesadopted in home countries of the parents. Thus, it is argued that the MNCs bringwith them to the host country their cultural bias powerfully based in developedcountry. This, according, to some, damages the local culture. This problem maynot be serious in host countries which have similar cultural patterns. But in thosehost countries which belong to different cultures, this problem becomes fairlyacute. Their advertisements and sales promotions have very often distorted localcultural preferences and thus created substantial confusion in the host countries.It may also happen sometimes that such advertisements may not bring thedesired result to the MNC as has been theexperience in the fields of food, drinks and clothes.While the local enterprises are imitating the MNCs in respect of advertisementand market promotion, MNCs are also fast learning the necessity of adaptingtheir promotion campaigns consistent with a host country's culture although themajor refrain remains the global market approach of the MNCs where thematerial differences are expected to be either eliminated or reduced. MNCs and Social Responsibility: Modern business is expected not to overlook itssocial responsibility. While the government's intervention is disliked, there isincreasing realization that modern business must realize its social responsibility. The. MNCs may have different perceptions of social responsibility. In the homecountry, they can be more sensitive to the national responsibility whereas in thehost country, especially in a developing country, it could be less. This tendency ishowever changing although very slowly. The MNCs are perhaps realising that it isin theirlong-term interest to acknowledge their social responsibility in the host countryalso. But the Bhopal disaster case which was caused by the leak of gas from theUnion Carbide Plant, does not give much hope that MNCs would behave with fullsense of responsibility. The irresponsible behaviour of the, Union Carbide causedmisery to a large number of inhabitants of Bhopal MNCs often sell medicines indeveloping host countries which have been banned in their home countries. MNCs and Environment Protection in Host Countries : MNCs are underincreasing pressure by their home governments to give up the technologieswhich damage the environment. Hence MNCs are choosing countries whereenvironment regulations are weak. It is likely that MNCs are not mindful of theenvironmental disaster they create in a host country. What is more concerning isan intellectualsupport to such a shift as has been argued by the Vice-President of the WorldBank, Professor Lawrence Summers. According to him the harm from the shiftingof environmentally pollution prone industries to the developing countries will befar less than if these industries were operated in the developed countries for thepopulation of developed countries has lower limits of tolerance of environmentalpollution and higher level of health consciousness than in the developingcountries. Restrictive Business Practices : One of the important aspects of the MNCs'operation has been their restrictive business practices which affect the free operation of their subsidiaries, affiliates and branches in host countries. Theserestrictive business practices include typing imports to specific sources of interest to MNCs, conditions of technology transfer, price fixation, exports,restrictive use of brand names and trademarks etc. Efforts at De-stabilisation : The history of MNCs shows that they have at timestaken recourse to de-stabilisation of inconvenient governments especially indeveloping countries However, MNCs have been found not to be indulging inpolitical de-stabilisation in the developing countries during the latter half of theseventies and the eighties. The absence of such a phenomenon now can beattributed to a few main factors:(i)The MNCs no longer needed to indulge in political de-stabilisation as theinternational ideological environment in the eighties had been suchthat there seemed no basic contradiction between the objectives of theMNCs and the governments of most host developing countries.(ii)The MNCs appreciated the fact of independent governments in thedeveloping countries. These governments have developed the capacityto cope with such situations or contingencies. Similarly, the hostdeveloping countries also recognized the need to adhere to thecommitments made by them. Therefore, in the eighties one witnessedsubstantially lesser number of nationalizations and expropriations thanhad been in the sixties and the early seventies.(iii)The MNCs were not very much interested in raw materials in the eighties. They were steadily withdrawing from these sectors, thus removing theprime cause of confrontation between the host country governmentsand the MNCs.(iv)The emerging importance of smaller MNCs in their own countries has alsocontributed to the growth of confidence of developing countries in the MNCs.

History of Multinational Companies?

Multinational Companies(MNCs) are large companies that operate in several countries at the same time. The first MNCs were established in the 1920s. Many more came up in the 1950s and 1960s as US businesses expanded world wide and Western Europe and Japan also recovered to become powerful industrial economies. The worldwide spread of MNCs was a notable feature of 1950s and 1960s. This was partly because high import tariffs imposed by different governments forced MNCs to locate their manufacturing operations and become 'domestic producers' in as many countries as possible.

What is the difference between a corporation and an MNC?

A corporation is a legal entity that can engage in business activities, issue stock, and protect its owners from personal liability. A multinational corporation (MNC), on the other hand, is a specific type of corporation that operates in multiple countries, managing production or delivering services across international borders. While all MNCs are corporations, not all corporations are MNCs, as many operate solely within a single country. The key distinction lies in the global reach and operations of an MNC compared to a domestic corporation.

MNC are a mixed blessing to the developing countries Comment on this statement?

Multinational Corporations are indeed a mixed blessing for the development countries. This is because of the fact that although MNCs has there advantages but, along with them it also has its own disadvantages.The following points highlight the advantages of MNCs to the developing countries.i. Better employment opportunities- MNCs help to create better and high number of employment opportunities in the developing countries. With increased market operations, they help in boosting the employment in the nation.ii. Employing new technologies- As MNCs enter the markets of the developing countries, it brings along the new technologies and innovations with them. This adds to the development of the domestic industries.iii. Improvement in infrastructure- Along with the use of new technology, the overall level of infrastructure of the country also rises. This also adds to the benefits to the developing countries.iv. Wide variety of goods available- As MNCs enter the domestic market, it brings along a flood of variety of the goods and services that are provided in foreign markets. This provides the developing nations a variety of goods to choose from.The following points highlight the disadvantages of MNCs.i. Exploitation of cheap labour- MNCs often lead to the exploitation of the cheap labour in lieu of low wage rates.ii. Increasing domestic competition- By influencing the market, MNCs increase the level of competition among the domestic industries and thereby damages the domestic market.iii. Outflow of funds to protect MNCs- The government in order to protect the MNCs for foreign investment, directs huge amount of funds to them. Also, large amount of funds in terms of profits and dividends, etc also flows out to the foreign countries.iv. Environment degradation- As MNCs use the natural resources present in the developing countries, it leads to a depletion in the domestic resources. All this may result in environment degradation and displacement issues.Thus, analysing the above pros and cons of MNCs, we can say that they are a mixed blessing for the developing nations.