Advantages and Disadvantages of Mnc Essay

728 Words Feb 11th, 2013 3 Pages
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
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They can produce goods having international standards and quality specifications by adopting the latest technology. Generally, multinationals transfers technology through joint venture projects.

* Potential source of capital and advanced technology: Economically backward countries invite multinational corporations as a potential source of capital and advanced technology to generate economic growth and to create employment opportunities.

* Expansion of market territory: Multinational corporations enjoy extension of activities beyond the geographical boundaries of their countries. Multinational corporations can enhance their international image by expanding their operations activities.

* Creating employment opportunities: Increase in the scale of operations results in more job opportunities. The entry of multinational corporations helps in creating employment opportunities in production and marketing activities.

* Lower cost of production : Multinational corporations carry on operations on a large-scale, which ensure economics in material, labour and overhead costs.

Disadvantages:- * MNC's may transfer technology which has become outdated in the home country.

* As MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries.

* MNC's may kill the domestic industry by monpolising the host country's market.

* In order to make

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