What is Shareholders?
Advantages and disadvantages of the Multinational Company and explain each point?
Answers
Answer:
Shareholder means an owner of shares in a company.
ADVANTAGES
Multinational corporations are often responsible for today’s best practices.
Most multinational corporates rely on merchants and distributors for their goods and services. Some even use these third-party entities to create additional sales opportunities. Because of their global presence and overall sizes, these organizations use leverage with their associates to produce a required action for each customer.
If the vendor fails to do so, then the multinational corporation can move to a different supplier immediately. This practice directly eliminates some distribution businesses overseas with a single decision, which is why this structure creates competences of scale that keep prices down while still ensuring reasonably excellent product quality.
2. Innovation happens because of the investments made by multinational corporations.
Most multinational corporations spend about 5%-10% of their yearly budget on innovative research and development projects. Most of the firms that invest richly into R&D are the organizations who are on the Fortune Global 500 list consistently.
Only two companies, Stanley Black and Decker and Apple, qualify as high-leverage innovators because of their investments today. The world’s largest spenders increased their investments by 11.4% in 2018 to total almost $800 billion. Without these investments, the world would be a very different place.
1. Multinational corporations can use their structure to form monopolistic markets.
Most countries treat the assets of a multinational corporation as an independent structure, like a transnational company, instead of looking at the hierarchy of the business for what it tends to be. This disadvantage allows each firm to have more flexibility in how they handle the local marketplace with their presence. Global monopolies do not currently exist, by firms like Alphabet, Illumina, and Broadridge all manage a 50% share or more of their industry.
When these structures are present and treated in this way, then the benefits of scale allow the multinational corporation to price everyone out of the market. There might still be local competition, but the average consumer will work with the cheapest offer whenever if provides a similar amount of value for them.
2. Because of their size, multinational corporations put SMEs out of business.
Did you know that 9 out of 10 companies will eventually fail? The most critical time for any small business is during the first five years of operation. About one-third typically fail in their first 12 months of existence. One of the contributing factors to this problem is the size and scale of multinational corporations. Bigger companies can produce larger bulk orders, which means they can see a per-unit price savings when compared to SMBs and SMEs.
“Multinational corporations do control,” said California Governor Jerry Brown. “They control the politicians. They control the media. They control the pattern of consumption, entertainment, and thinking. They’re destroying the planet and laying the foundation for violent outbursts and racial division.”
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