Did you know about the Problems of Multinational Companies? Do not worry today I will share all information about multinational companies. Read the information about multinational companies carefully.
Problems of Multinational Companies
Culture And Religion:
The religion of the different countries is different. When multinational companies chalk out their production program in any country, the local culture and religion trends become hurdles for the multinational companies, For instance, the production of wine can’t be carried in any Islamic country, and Pork is not allowed only Halal meat can be sold and consumed.
The difference in language is one of the outstanding barriers to international trade. The language problem is the biggest hurdle in the publicity of the product. While the success of modern business depends on the publicity exclusively. This problem becomes more serious in developing countries where the literacy rate is very low.
Local Laws And Tariffs:
Every country imposes tariffs and other restricting laws to discourage especially imports which is a major constraint on multinational companies’ business. In addition, labor laws tax system, foreign exchange laws, etc create blocks in the business of multinational companies.
When Pakistan faces summer, winter prevails in Australia. If any Australian company intends to start its business in Pakistan, it will have to design its production program in the light of this difference in weather at one time.
Slavery Of Traditions:
Every country has its own traditions with which the people have strongly tied these traditions are the big hurdle in adapting the new trends. For example, the German trend PAKI PAKAI ROTI could not be successful in Pakistan. It becomes very difficult for multinational companies to incorporate new trends with local traditions.
Color And Creed:
Some of the countries of the world feel as superior nations with reference to color and creed like Germany claims to the ‘purest nation. White people feel superior then the blacks. There Superiority and inferiority complexes are the hurdle in the trade relations.
The local staff working for multinational companies become a problem when they get enough experience of work and start resisting dictates from the head offices abroad. This staff tends to favor local people, laws, and try to work in the interest of their own country.
Importance of Role of MNCs
MNCs create large – scale employment opportunities in host countries. This is a big advantage of MNCs for developing countries; where there is a lot of unemployment.
Automatic Inflow Of Foreign Capital:
MNCs bring large capital for the rapid development of developing countries ( like Pakistan ) In fact with the entry of MNCs, the inflow of foreign capital is automatic
MNCs carry the advantages of technical development to hosting countries. In fact, MNCs are the vehicle for transference of technical development form one country to another, because of MNC’s poor host countries also being to develop technically.
MNCs employ the latest management techniques. People employed by MNCs do a lot of research in management In a way, they help professional management along the latest lines of management theory and practice. This leads to management development in host countries.
The MNCs are established with one of the main objectives of expansion of the market because the wider is the market higher will be the production and so the lower will be the cost which will guarantee the increased profits.
Improvement Of Standard Of Living:
By providing super quality products and services: MNCs help to improve the standard of living of people of the host countries.
End Of Local Monopolies:
The entry of MNCs leads to competition in the host countries. Local monopolies of host countries ether start improving their products or reduce their price.