disadvantages of MNCs
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Disadvantages of Multinational Company
Posted Date: 26 Aug 2010 |Updated: 26-Aug-2010 |Category: Education |Author:Mohammed Julfekar Haider |Member Level:Gold |Points: 10 |
This resource gives information on the disadvantages of multinational company.
The disadvantages of multinational company are as follows:-
(1) High Profit Low Risk Investment: The multinational company prefer to invest in areas of low risk and high profitability. Issue like social welfare, national priority etc. have less priority on their agenda. Mostly they invest in consumer goods industry.
(2) Interference in Political Matters:The multinational company from developed countries interfere in the political affairs of developing nations. There are many cases where multinational company has bribed political leadership for their own economic gains.
(3) Create Artificial Demand: These companies create artificial and unwarranted demand by making extensive use of advertising and ales and promotion techniques.
(4) Exploitation: These companies are financially very strong and adopt aggressive marketing strategies to sale their products, adopt all means to eliminate competition and create monopoly.
(5) Technological Problem: Technology they use is capital intensive so sometimes that technology does not fully fit in the needs of developing countries. Also, multinational company is criticized for transferring outdated technology to developing countries.
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Explanation:
MNCs invest to buy up local companies and then to expand their production
they control the production of local companies
the products supply will sell under their own brand names
they have tremendous power to determine price deliveries labour conditions
they are exerting a strong influence on at the distant locations
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