Preview

Problems and Challenges Faced by Multinational Corporations (Mncs) Operating in Less Developed Countries (Ldcs)

Powerful Essays
Open Document
Open Document
1833 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Problems and Challenges Faced by Multinational Corporations (Mncs) Operating in Less Developed Countries (Ldcs)
Introductions
A multinational corporation (MNC) is a corporation that operating in two or more countries, known as host countries but managed from one country, known as home country. Multinational Corporation is also known as international corporation (Wikipedia, 2011). Besides that, MNC can be defined as a corporation that derives revenues from operations in countries other than home country (BusinessDictionary, 2011).
The objective of MNC to operate in other countries is to gain competitive advantage through several ways. Firstly, MNC is able to take advantage of difference in country-specific circumstances. For example, MNC may choose to locate its productions in less developed country like Vietnam to gain cheap labor cost. Secondly, MNC is trying to reach economies of scale. For example, MNC is able to obtain cheaper price in bulk purchasing then production in bulk and sell in bulk. Therefore, unit cost of production and selling can be reduced so increase revenues. Thirdly, MNC is also able to choose the best serving mode in particular country such as exporting, licensing and direct investment. For example, exporting enables MNC to enter a low-price or commodity-type market with the absence of set-up costs.
Less developed countries can be referred as least developed countries (LDC). According to United Nations (UN), LDCs are countries that which have low income, human resource weakness and high degree of economic vulnerability. Low income criterion in LDCs are judged based on a three years average estimate of the gross national income (GNI) or gross domestic product (GDP) per capita (Nationsonline, 2011). Weak human resources can be measured by a composite index based on the indicators of health, education and adult literacy which may cause poor development in certain countries. Lastly, the economic vulnerability is another characteristic of LDCs which can be measured by composite index based on the indicators of the share of manufacturing in GDP, the share

You May Also Find These Documents Helpful

  • Good Essays

    A multinational corporation/company is an organisation doing business in more than one country. 'In other words it is an organisation or enterprise carrying on business in not only the country where it is registered but also in several other countries. It may also be termed as international corporation, global giant and transnational corporation.…

    • 1617 Words
    • 7 Pages
    Good Essays
  • Powerful Essays

    In this essay the term MNC refers to “a firm, which owns assets and controls activities in different countries.” This means that a corporation needs at least one subsidiary in a non-domestic country to be classified as an MNC (just foreign trade is not sufficient).…

    • 1577 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    Financial Strategy

    • 8256 Words
    • 34 Pages

    A multinational corporation (MNC) is a business firm incorporated in one country that has production and sales operations in several other countries.…

    • 8256 Words
    • 34 Pages
    Good Essays
  • Powerful Essays

    ACCUMULATION OF WEALTH

    • 1511 Words
    • 7 Pages

    A developing country, also called a less developed country (LDC) is a nation with a lower living standard, underdeveloped industrial base and low human development index (HDI), relative to other countries. The development of a country is measured with statistical indexes such as income per capital (per person), (gross domestic product), life expectancy, the rate of literacy (ignoring reading addiction). Developing countries like Tanzania, Kenya, Ethiopia and others are, in general countries that have not achieved a significant degree of industrialization relative to their population and have, in most cases, a medium to low standard of living.…

    • 1511 Words
    • 7 Pages
    Powerful Essays
  • Good Essays

    MNC is most simply defined as a corporation or enterprise that conducts and controls productive activities in more than one country with the head office being established in a developed country. Big companies mostly from America, Europe and Japan but also increasingly from newly industrializing countries like South Korea, Taiwan and Brazil, create development opportunities. The issues created by these companies are serious ones that must be considered.…

    • 665 Words
    • 3 Pages
    Good Essays
  • Satisfactory Essays

    MNC

    • 878 Words
    • 3 Pages

    Multinational Corporations (MNCs) is companies, which own or control production or service facilities in more than one country. In order to obtain plant and other production facilities in foreign countries, an MNC must invest. Thus an MNC has to be a foreign investor.…

    • 878 Words
    • 3 Pages
    Satisfactory Essays
  • Powerful Essays

    Case Study Hp

    • 10875 Words
    • 44 Pages

    MNC means Multi National Corporation. MNC company is the company where the company produces the goods in anywhere of the world and sells the goods in anywhere of the world is called MNC.…

    • 10875 Words
    • 44 Pages
    Powerful Essays
  • Powerful Essays

    • What is a Multinational Corporation? – A corporation that owns and operates production facilities in two or more countries. OR – A corporation with power to coordinate and control operations in two or more countries without owning them. • Typically have Headquarters in the country of origin • Build or acquire affiliates or subsidiaries in other countries (the host nation) ACCG330 Strategic Management Accounting Session 1, 2012…

    • 1066 Words
    • 5 Pages
    Powerful Essays
  • Powerful Essays

    globalisation

    • 852 Words
    • 4 Pages

    A multi national corporation acording to Investopedia is a corporation that has its facilities and other assets in at least one country other than its home country. Such companies have offices and/or factories in different countries and usually have a centralized head office where they…

    • 852 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    Op Exam Review

    • 2044 Words
    • 9 Pages

    Multinational Corporation: has extensive involvement in international business, owning or controlling facilities in more than one country…

    • 2044 Words
    • 9 Pages
    Good Essays
  • Good Essays

    Document of Anlyisis

    • 3664 Words
    • 15 Pages

    An enterprise operating in several countries but managed from one (home) country. Generally, any company or group that derives a quarter of its revenue from operations outside of its home country is considered a multinational corporation.…

    • 3664 Words
    • 15 Pages
    Good Essays
  • Good Essays

    operations of firms with interests in several countries. Such firms are sometimes called multinational corporations (MNC's)1. Points of discussion with this topic may…

    • 4687 Words
    • 17 Pages
    Good Essays
  • Powerful Essays

    Multinationals are corporations which operate in at least two countries but whose management is established in one specific country. They have their operations in at least one other country different from the home country where the management is based. In the current world, multinationals control a substantial market share of all manufacturing companies. Globalization has had a positive impact on multinational organization and has enabled many corporations to expand their production to multinational levels by providing better ways of transport and communication. After the Second World War, the rate of organization going multinational significantly increased. Many organizations have adopted multinational production for it has an array of benefits to the organization, the general public of the host country and the governments of both the domestic and the host country.…

    • 2328 Words
    • 6 Pages
    Powerful Essays
  • Powerful Essays

    Multinationals Corporations

    • 3038 Words
    • 13 Pages

    Multinational corporations (MNC’s) also known as International Corporation, transnational corporation, global corporation and many more. Due to the political changes that have occurred during the years, the opportunities for multinationals corporations have increased considerably. As a fact multinationals corporations are growing with rapidity. For example in Mauritius we have KFC, Mac Donald’s, Pizza hut which are all multinationals and have branches throughout the island.…

    • 3038 Words
    • 13 Pages
    Powerful Essays
  • Good Essays

    A multinational corporation (MNC) or multinational enterprise is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries.It has branch plants outside of the country where its main operations and planning take place.…

    • 442 Words
    • 2 Pages
    Good Essays