Multinational Corporation Advantages And Disadvantages

Good Essays
Nam Pham
CWID #: 802 140 244
Finance 370
Part 3 – Short Paper

Topic: Multinational Corporation

Multinational Corporation (MNC) is a corporation that has asset in other country other than its local country. It is sometimes called international corporation, a transnational or stateless corporation. Some companies also have their factories and offices worldwide. Multinational Corporation began to evolve since the nineteen century with American and European countries. According to Hymer, the multinational corporation was based on the perspective of the American. In the nineteen century, American developed many city that called multi-city and used manufacturing strategy plus wide marketing. After that, these companies were considered as multinational
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• The last reason is the efficiency seeking; multinational corporation will seek their overseas to re-organize economic changes.

The fact that multinational corporation offer a lot of job opportunities to the foreign countries is undeniable. Beside that, there are some major issues in the economy that happened because of them. The following will be a list of the advantages and disadvantages of multinational corporations.

First, let’s take a look of the main advantages of multinational corporations that will offer:

• The benefit for consumers: it can be easily notice that the larger the corporation, the better they are to lower the average prices and costs for its consumers. For example: some developed countries like Japan or Korea can offer cheaper car price than developing countries, the same with other technology industry like smart phone, and electronic.

• Corporations will create jobs and wealth: after putting their money to invest to foreign markets; of course they will hire the local people to get the advantage from the low labor cost. Wealthy is likely to come to their resident soon
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For example, we can find Mc Donald in almost every country, and we know of course it is not the best food and the area nor the worst one either.

• Huge profits will consumed for Development and Research: some project and development need a very huge money in order to make it work and doing research. In these case, only large organization have the ability to sponsor.

Now, let’s discuss the main disadvantages that relate to multinational corporations:

• The advantage of multinational corporations: since most multinational corporations are large and very successful in their home country. When it spread their wings oversea, it would becomes a thread to the local small firm to succeed.

• The expenses of the consumers: this is one of the most interesting thing for their corporations. Most multinational corporations have a power of monopoly in order to make the most profit.

• The thread of local firms on the nerve of being push out of business: there is a fact that many local firms have been pushed out of the business because of these giant multinational
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