Q:

What are the advantages and disadvantages of multinational companies?

A:

Multinational companies allow operators to expand operations and derive profits from multiple countries. MNCs also bring jobs and access to products and services to countries of operation. However, MNCs are more complex to operate, and they face criticism for profit-centric motives and cultural influence.

For companies that have saturated a domestic marketplace, becoming an MNC is one of the only remaining paths to growth. Offering products in different parts of the world can also lead to global synergy, where a company brand takes on greater significance because of global communication than it does in a domestic-only market. A global business is also able to take advantage of free movement of supplies and goods to coordinate an optimal global strategy and cost structure.

MNCs sometimes face stiff resistance from foreign governments and citizens. Governments have concerns about the political and economic power that MNCs can gain by drawing on locals for profit. Also, MNCs sometimes come in and present jobs and economic value, but end up leaving or relocating. For the business itself, despite the opportunities, managing the operations of an MNC is more involving than managing a domestic company. In the area of human resources, it is difficult to create a stable organizational culture with employees from diverse backgrounds working for the business in each country.


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