Table of Contents
- 1 What are 5 reasons to become a multinational company?
- 2 What is the key goal of multinational corporations quizlet?
- 3 Why is it harder for multinational corporations MNCs to lobby their host government than it is to lobby their home government?
- 4 When conducting international business firms generally face the most risk when they?
- 5 What are the positive impacts of multinational companies?
- 6 How do multinational companies benefit a country?
What are 5 reasons to become a multinational company?
Reasons for Being a Multinational Corporation
- Access to lower production costs. Setting up production in other countries, especially in developing economies, usually translates to spending significantly less on production costs.
- Proximity to target international markets.
- Access to a larger talent pool.
- Avoidance of tariffs.
What is the key goal of multinational corporations quizlet?
The goal of a multinational corporation (MNC) is the maximization of shareholder wealth. If managers of foreign subsidiaries make decisions that maximize the values of their respective subsidiaries, they automatically maximize the value of the entire corporation. You just studied 18 terms!
Why do companies want to become multinational?
There are some reasons why companies wish to become multinationals : to increase market share – companies may find they are at saturation point in the domestic market and need a new outlet. They may start by exporting to other countries but eventually they will want to being production overseas.
Why are multinational companies important?
Inward investment by multinationals creates much needed foreign currency for developing economies. They also create jobs and help raise expectations of what is possible. Their size and scale of operation enable them to benefit from economies of scale enabling lower average costs and prices for consumers.
Why is it harder for multinational corporations MNCs to lobby their host government than it is to lobby their home government?
Why is it harder for multinational corporations (MNCs) to lobby their host government than it is to lobby their home government? Citizens and politicians of the host country may resent foreigners’ trying to influence them. Why are American mercantilists concerned about foreigners purchasing local industries?
When conducting international business firms generally face the most risk when they?
Ch 1, Q 76; When conducting international business, firms generally face the most risk when they: make acquisitions of existing operations.
What are the advantages of multinational companies?
The main benefits of being a multinational company
- Specialisation in production. The scale of many industries means firms split production into different countries.
- Outsourcing.
- Economies of scale.
- Tax avoidance.
- Employment of skilled labour.
- Wider consumer base.
- Evaluation.
How do companies become multinational?
Multinational corporations are typically large companies headquartered in one country but with operations in several countries. The defining trait of a multinational corporation is being incorporated in one country and doing business in several countries.
What are the positive impacts of multinational companies?
Benefits of Multinational Corporations
- Create wealth and jobs around the world.
- Their size and scale of operation enable them to benefit from economies of scale enabling lower average costs and prices for consumers.
- Large profits can be used for research & development.
- Ensure minimum standards.
How do multinational companies benefit a country?
MNCs are believed to be highly beneficial for developing countries in terms of bringing employment opportunities and new technologies that spillover to domestic firms. Furthermore, MNCs often benefit from government subsidies, which could in future be linked to investment in local firms.
How do multinational corporations affect the economy?
When multinational corporations invest in a country they create employment opportunities. They account for increased incomes and expenditures in the economy of the host country stimulating growth. Workers also benefit from technology transfer as new machinery is imported into the host country.
What do you think that the agency costs be large or small for an MNC than for a domestic firm?
ANSWER: The agency costs are normally larger for MNCs than purely domestic firms for the following reasons. First, MNCs incur larger agency costs in monitoring managers of distant foreign subsidiaries. Second, foreign subsidiary managers raised in different cultures may not follow uniform goals.