Unformatted text preview: and, critics say multinationals can have undue political
influence over governments, can exploit developing nations as well4
as create job losses in their own home countries.
as MNCs-Features Following are some of the major features of multinational
company 1. MNCs have managerial headquarters in home countries,
while they carry out operations in a number of other (host)
countries. 2. A large part of capital assets of the parent company is
owned by the citizens of the company's home country.
owned 3. The absolute majority of the members of the Board of
Directors are citizens of the home country.
Directors 4. Decisions on new investment and the local objectives are
taken by the parent company.
5 MNCs-Features 5. MNCs are predominantly large-sized and exercise a great
degree of economic dominance.
6. MNCs control production activity with large foreign
direct investment in more than one developed and
7. MNCs are oligopolistic in character. It is sustained by
modern technologies, management skill, product
differentiation and enormous advertising. Oligopoly is
market structure characterized by a small number of large
firms that dominate the market, selling either identical or
differentiated products, with significant barriers to entry into
8. MNCs play important role in globalization
6 Why do MNCs go global?
NCs To broaden their markets-After a company has saturated its
home market, growth opportunities are often better in
Thus, such US homegrown firms as Coca-Cola and
McDonald’s are aggressively expanding into overseas
markets, and foreign firms such as Sony and Toshiba now
dominate the U.S. consumer electronics market.
Also, as products become more complex, and development
becomes more expensive, it is necessary to sell more units
to cover overhead costs, so larger markets are critical.
Thus, movie companies have “gone g...
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