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On the other hand critics say multinationals can have

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Unformatted text preview: and, critics say multinationals can have undue political On 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 Following company company 1. MNCs have managerial headquarters in home countries, 1. while they carry out operations in a number of other (host) countries. countries. 2. A large part of capital assets of the parent company is 2. owned by the citizens of the company's home country. owned 3. The absolute majority of the members of the Board of 3. Directors are citizens of the home country. Directors 4. Decisions on new investment and the local objectives are 4. taken by the parent company. taken 5 MNCs-Features 5. MNCs are predominantly large-sized and exercise a great 5. degree of economic dominance. degree 6. MNCs control production activity with large foreign 6. direct investment in more than one developed and developing countries. developing 7. MNCs are oligopolistic in character. It is sustained by 7. modern technologies, management skill, product differentiation and enormous advertising. Oligopoly is Oligopoly 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 the industry. the 8. MNCs play important role in globalization 8. play 6 Why do MNCs go global? NCs To broaden their markets-After a company has saturated its After home market, growth opportunities are often better in foreign markets. Thus, such US homegrown firms as Coca-Cola and Thus, 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 Also, 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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