The development of the free market economy concept at the international level helps large scale manufacturing to enter the international market without much hassles. Inequality to staff A multinational company appoints staff both from the parent country and the host country. Beijing Chengxin Weiye Printing Inc. Without exception these early corporations created differential economic outcomes between their home country and their colonies via a process of colonial resources and labour, and investing the resultant and net gain in the home country. This structure allows the company to evaluate the geographical markets that are most profitable. However, management and control of the branches is done according to the system of the parent company. The Company also had elsewhere.
They charge any price for the products and exploit customers by charging a huge price. Hence, multinational companies are important media of international cooperation. It is sustained by modern technologies, management skill, product differentiation and enormous advertising. It means, it purchases raw materials at a minimum cost. By completely committing to a multinational approach, a corporation can establish joint ventures or global partnerships to exert full control over the manufacturing process and exchange access to local markets with its business partners. The jobs given to the locals of the host country should be the jobs enjoyed by the people where the head office is located.
These innovations and discoveries help in introducing new products, services, and knowledge. The customers of the host country are benefited by quality products in minimum cost. They enter the foreign market to produce and sell their products. This helps minimize import from foreign countries and can save foreign currencies. This strategy allows them to take advantage of factors such as the low costs of labor and raw materials, lower capital investment requirements and less stringent local laws and regulations. And although not all countries can have lower tariffs, there are those that give tax cuts to investors to attract more international companies to do business in these countries.
As a result, international wealth is maximized with free exchange of goods and services. Its original name is Federal Express. This figure is almost 10% of the world's total production and close to 30% of the U. For example, all the production personnel globally for a company work under the parameters set by the production department. They purchased the best raw materials from local markets in the cheapest price, processed the raw material locally and delivered them in their home country for production of finished products. Therefore, in the long run, multinational companies earn more profit by implementing their efficiency and network.
Especially, they perform business operations throughout the world through their branches, subsidiaries or agents. They also transfer new technology in to developing countries through their branches and subsidiaries which are helpful for industrialization International operations One of the important features of a multinational company is its operation in two or more countries. . This leads to managerial development in host countries. Horizontal Expansion - Production Often, multinational companies set up production units in other countries for the sole purpose of catering to the local market.
More focused on adapting their products and service to each individual local market. It maintains international standard in its products and services. From then the company is globally known for its software products and line of operating systems, Microsoft Office Suite and Internet Explorer. Multinational corporations are subject to for lacking , and that this shows up in how they evade ethical laws and leverage their own business agenda with capital, and even the military backing of their own wealthy host nation-states. It operates with different names in different countries. Mostly managed by entrepreneurs with extensive technical backgrounds. Similarly, surplus products of subsidiaries of multinationals can also be exported to foreign countries.
The main objective of the establishment of a multinational company is to earn maximum profit by supplying goods and services to the customers of the host country. In the world economy facilitated by multinational corporations, capital will increasingly be able to play workers, communities, and nations off against one another as they demand tax, regulation and wage concessions while threatening to move. This intersection is known as , and it describes the importance of rapidly increasing global mobility of resources. They also use sequential marketing, a strategy that edges out the local competition by offering better and more state-of-the-art products. Similarly, it pays minimum wages to employees as compared to employees of the parent country. Multinationals also may enter foreign markets when other brands offering the same products set up operations there. Their names are kind of a status symbol for a regular human being.
Take the case of multinationals that create offices in developing countries for their technical operations and manufacturing. While only one in 10,000 small-to-medium-sized businesses in the U. Their attention and finances might be more devoted to wasteful counter and competitive advertising; resulting in higher marketing costs and lesser profits for the home country. Cost Minimizer These multinational companies seek to invest in countries where the production cost is low. Multinational corporations are enterprises that operate in several countries worldwide. The Corporation That Changed the World How the East India Company Shaped the Modern Multinational. Another reason may be to compete with larger companies and maybe to receive economies of scale.
It, therefore, has to pay special attention to the quality of its products. They are more focused on adapting their products and services to each individual market. The parent company typically is based in the home country, and it sets up units in other countries called host countries. However parent company manages and control the operation of its branches and subsidiary through trade mark, technology, and patent right. They carry similar brand names and are similar in appearance. Multinational companies may enjoy high competitive advantages over local firms that can destroy local competition rather than promote it. There is, then, an implicit danger to the independence of the host country, in the long-run.