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Multi-national
Companies
BENEFITS AND DRAWBACKS.

SLO NO. 2 . 14 . 2

Made By:
Numrah Tasleem
 AYS
D

Agenda
TO

Multi-national Companies Overview

Benefits

Drawbacks
 HORT
S

Multi-national

BR I E F
Companies
MNCs are global companies operating in multiple countries.
They benefit from economies of scale and maintain a strong
global presence.
Complex organizational structures and a global workforce are
common.

MNCs contribute to local economies through job creation and

growth.
Challenges include regulatory compliance and ethical
responsibility.
.Their impact on host countries can be both positive and
negative, making them key players in the global economy.
 Potential Benefits
Increased Market Access: One of the primary advantages of going multinational is
access to a larger customer base. This can lead to increased sales and revenue
opportunities.
Diversification: Operating in multiple countries can help mitigate risks associated with
economic downturns or political instability in one market. A diverse portfolio can
reduce a company's overall risk exposure.
Economies of Scale: Multinationals often benefit from economies of scale due to their
larger operations. This can lead to cost efficiencies in production, distribution, and
procurement.
Enhanced Innovation: Operating in different countries allows MNCs to tap into local
talent, technologies, and ideas, fostering innovation and creativity.
Export Opportunities: Multinational corporations can leverage their global presence to
export products or services from one market to another, further expanding their
revenue streams.
Job Creation: Expanding abroad can create job opportunities both in the
home country and in the countries where the MNC operates, contributing to
economic growth.
Knowledge Transfer: MNCs often facilitate the transfer of knowledge,
technology, and best practices between countries, which can benefit local
industries and economies.
Brand Recognition: Establishing a multinational presence can enhance brand
recognition and reputation, making it easier to compete in various markets.
 Market Entry Costs: Expanding into new markets can be
expensive. Setting up operations, complying with local

Potential regulations, and marketing to a new audience all require

significant investments.

Drawbacks
Repatriation of Profits: While MNCs can generate revenue
globally, they may face challenges repatriating profits back
to their home country due to taxes and currency exchange
rates.

Local Competition: Multinational companies may face resistance from local

businesses and governments who view them as a threat to local industries or
as tax-avoiding entities.
Political and Regulatory Risks: Operating in multiple countries exposes MNCs
to political and regulatory risks, including changes in government policies,
trade restrictions, and legal challenges.
Cultural and Language Barriers: Different markets have distinct cultures and
languages, which can lead to challenges in communication, marketing, and
understanding local consumer preferences.
Logistical Complexities: Managing operations across borders can be
complex and require efficient supply chain and logistics management.
Ethical and Social Responsibility Concerns: MNCs may face scrutiny
regarding their practices, such as labor conditions, environmental impact,
and adherence to ethical standards, both at home and abroad.
Exchange Rate Volatility: Fluctuations in currency exchange rates can
impact the financial performance of a multinational company, affecting
both revenues and expenses.
 Conclusion
In conclusion, becoming a multinational corporation can offer significant
advantages, including access to new markets, increased revenue, and
diversification. However, it also comes with challenges such as market entry
costs, regulatory risks, and ethical considerations. Successful multinational
expansion requires careful planning, risk management, and a commitment to
adapting to local conditions while maintaining global competitiveness.
Thank you!