Advantages of Multinational Companie(MNC)s
During the fifteen years, MNCs have played and important role in the indian economy. Even in most of the developing countries MNCs have become a common feature of their economy. In this connection, areport of international labour organisation says. 'for some, the multinational companies are an invalueable dynamic force and instrument for wider distribution of capital, technology and employments, for others,they are mousters which our present institutions, national or international, can not adequately control.' Of course, MNCs have both advantages and disadvantages. the advantages of MNC can be classified into two categories such as advantages to homw country and advantages to host country.
Advantages to home country:
1. Raw material and labour at low cost: MNCs can obtain both raw material and labour at lowest cost because of the fact that the MNCs can purchase a large amount of material, which enjoy the economy of large scale.
2. Wide Market: The home country can capture wide market through MNCs. It is possible only by the MNCs because MNCs must provide the goods and services to two or more host countries.
3. Huge Profit: MNCs can produce their goods at large scale, with economy of large scale and also increase the level of sales. So MNCs can earn a huge amountn of profit as compared to other type of companies.
4. Integrating National Economies: MNCs provide an efficient means of integrating national economies because MNCs combine the various factors of economy of home country.
5. Stimulate domestic enterprise: MNCs also play an vital role by stimulating domestic enterprises as because these companies encourage and assist domestic suppliers by using their product and services at large scale.
6. Break domestic monopolies: MNCs can easily break the domestic monopolies. It is possible for MNCs because MNCs can provide quality goods and services to the consumers for better than that of the goods and survices provided by the domestic producers. Thereby the MNCs can also provide their goods and services at a reasonable price to the customers.
7. Inventions and Innovations: Innovation means utilizing inventions and discoveries in order to make new combinations in order to produce better goods which give the innovator more profits and satisfaction than before. On the other hand invention means discovery of new methods and new materials. MNCs have to maintain a global quality and international reputation in the production process and design, taste, quality of their goods and services, so MNCs make a commendable contribution to invention and innovation to the home country.
Advantages to host country:
1. Economic development: MNCs can increase the application of foreign capital as well as advanced technology for the enhancement of economic development of host countries.
2. Enhancement of employment: MNCs provide a large scale of employment opportunities in the host countries by estlablishing their branches or joint venture and creating frachisees etc.
3. Foreign trade: MNCs can improve the foreign trade of home countries by increasing their export and reducing import. Thereby the balances of payment position of the host country is improved.
4. Improve living standards: MNCs also can improve the standard of living of the people of host countries by providing quality goods and services.
5. Economics of large scale: MNCs can provide the benefits of economics of large scale production. The large scale of operation stimulates the economic and production of host countries.
6. Professionalism management: MNCs act as a instrument for the development of professionalism management in the field of business of host countries.
7. Share of profit: The host country can earn a good share in profit by investing their capital in subsidiaries of MNCs. It is possible because of the fact that the MNCs are solely profit making organisations.