Advantages and Disadvantages of Mnc

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Advantages and Disadvantages of Mnc

By | Feb. 2013
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Lydon State University

MBA (Finance)
Subject:- International Business
Topic:- Advantages & Disadvantages MNC to the host Country ( KSA) Submitted To :- Mr. Arman
Submitted By:- Anum Latif
Date:- 17 / 01 / 2012

Advantages:-|
* Research and development activities: Developing countries lack in research and development areas. Expenditure on research and development is essential for the promotion of technology. Multinational corporations have greater capability for research and development activities in comparison to national companies. Multinationals survive in the international market through their advanced research and development activities.

* Far-reaching effects on the economic, social and political conditions of the host country: Multinational corporations provide a number of benefits to the host country in the form of * Economic growth;

* increased profits ;
* Developing of new products;
* Reduced operational costs;
* Reduced labour costs;
* Changing social and political structure, etc. Thus, it helps in the exploitation of resources of host countries for their own economic advancement.

* Product innovation: Multinational corporations have research and development departments engaged in the task of developing new products, diversification in the product line, etc. Their production opportunities are far greater as compared to national companies.

* Marketing superiority: Multinational corporations enjoy market reputations and face less difficulties in selling their products by adopting effective advertising and sales-promotion techniques.

* Financial superiority: Multinational corporations generate funds in one country and use such funds in another country. They have huge financial resources at their disposal as compared to national companies. Moreover, multinational corporations have easier access to external capital markets.

* Technological superiority: Multinational corporations...

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