A
company that manufactures a product outside its home country it is called Multinational companies. They have its
branches all over the globe. [Normally these companies are public limited
companies in its structure.]
When
MNCs produce and sell in other countries there are getting many benefits as mentioned below;
1)
Great reduction of transport costs
2)
They can achieve greater economies of
scale.
3)
It can avoid the import restriction
of the home country.
4)
MNCs benefit from the liberal laws,
taxation policies and other governmental assistance.
5)
Lower wages especially in
developing countries with over population.
6)
They can take the advantages of Liberal
export laws.
The
main advantages of host country from
MNCs are;
1)
Increased employment opportunities.
2)
Possibility of bringing new
technology and management techniques.
3)
Increased competition can lead to improvement in quality and efficiency (and sometimes lower prices also).
There
are disadvantages for the host country
also.
1)
When MNCs take the profits to their own country, there will be a huge outflow of foreign currency.
2)
MNCs cause exhaustion of resources of
home country.
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