Essay About Mncs

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One of the most important phenomena of the latter half of the 20th century in international business was the emergence of the multinational corporation (MNC).

The many different definitions of MNCs usually rest on one of the following common characteristics: (a) company headquarters far removed from the country where the activity occurs, (b) foreign sales representing a high proportion of total sales, and (c) stock ownership and management that are multinational in character.

Among these the most important are reduction in potential production and employment; transfer of technology to other nations, which might undermine the current and future technological superiority of the home nation; and reduction of potential tax revenue of the home country.

MNCs can positively affect the host country by increasing production and employment (number of employees and skills), and promoting technical progress.

A second criticism is MNC utilization of inappropriate technologies.

In many developing countries, MNCs use capital intensive production techniques that are inappropriate for labor abundant nations, where they would increase unemployment.For example, MNCs may resist government attempts to redistribute national income through taxation.One example of political influence is in the case of Chile.Conglomerated MNCs produce different or even totally unrelated goods in various countries. The phenomenon of MNCs is not new, instead tracing back to the late 18th century when firms like the British, Dutch, and French East Indian companies sought raw materials overseas.The modern-day counterparts of these raw material-seeking firms are the multinational oil and mining companies, as recent advances in transportation and communications technology increased the feasibility of global production, enabling MNCs to grow rapidly over the past 60 years.Furthermore, a good deal of two-way foreign direct investment occurs among industrial countries: U. firms expand their European subsidiaries and at the same time European firms expand their U. The three largest MNCs worldwide in 2006 were Exxon Mobil, with headquarters in the United States and revenue of 9.9 billion; Wal-Mart, with headquarters in the United States and revenue of 5.6 billion; and Royal Dutch Shell, with headquarters in the Netherlands and revenue of 6.7 billion.MNCs can create several problems in the home country.Direct foreign investment usually allows the formation of MNCs, although their existence does not necessarily reflect a net capital flow from one country to another.MNCs can raise money for the expansion of their subsidiaries in the host country rather than in the home country. Among the major factors that influence firms’ decisions to go global are (a) appropriation of raw materials, (b) reduction in costs, mainly labor costs, (c) search for new markets and consequently for demand, (d) circumventing trade restrictions such as import tariff barriers, and (e) taking advantage of government policies offered by the host country, particularly relatively lower taxes.Another example is the case of United Brands (now Chiquita, producing mainly bananas), which in 1974 paid a

In many developing countries, MNCs use capital intensive production techniques that are inappropriate for labor abundant nations, where they would increase unemployment.

For example, MNCs may resist government attempts to redistribute national income through taxation.

One example of political influence is in the case of Chile.

Conglomerated MNCs produce different or even totally unrelated goods in various countries. The phenomenon of MNCs is not new, instead tracing back to the late 18th century when firms like the British, Dutch, and French East Indian companies sought raw materials overseas.

The modern-day counterparts of these raw material-seeking firms are the multinational oil and mining companies, as recent advances in transportation and communications technology increased the feasibility of global production, enabling MNCs to grow rapidly over the past 60 years.

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In many developing countries, MNCs use capital intensive production techniques that are inappropriate for labor abundant nations, where they would increase unemployment.For example, MNCs may resist government attempts to redistribute national income through taxation.One example of political influence is in the case of Chile.Conglomerated MNCs produce different or even totally unrelated goods in various countries. The phenomenon of MNCs is not new, instead tracing back to the late 18th century when firms like the British, Dutch, and French East Indian companies sought raw materials overseas.The modern-day counterparts of these raw material-seeking firms are the multinational oil and mining companies, as recent advances in transportation and communications technology increased the feasibility of global production, enabling MNCs to grow rapidly over the past 60 years.Furthermore, a good deal of two-way foreign direct investment occurs among industrial countries: U. firms expand their European subsidiaries and at the same time European firms expand their U. The three largest MNCs worldwide in 2006 were Exxon Mobil, with headquarters in the United States and revenue of $339.9 billion; Wal-Mart, with headquarters in the United States and revenue of $315.6 billion; and Royal Dutch Shell, with headquarters in the Netherlands and revenue of $306.7 billion.MNCs can create several problems in the home country.Direct foreign investment usually allows the formation of MNCs, although their existence does not necessarily reflect a net capital flow from one country to another.MNCs can raise money for the expansion of their subsidiaries in the host country rather than in the home country. Among the major factors that influence firms’ decisions to go global are (a) appropriation of raw materials, (b) reduction in costs, mainly labor costs, (c) search for new markets and consequently for demand, (d) circumventing trade restrictions such as import tariff barriers, and (e) taking advantage of government policies offered by the host country, particularly relatively lower taxes.Another example is the case of United Brands (now Chiquita, producing mainly bananas), which in 1974 paid a $1.5 million bribe to the president of Honduras in return for an export tax reduction.When the bribe was discovered, the president was removed from office.

.5 million bribe to the president of Honduras in return for an export tax reduction.When the bribe was discovered, the president was removed from office.

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