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Advantages of Multinational Corporations

Question

Analyse the advantages that an MNC has over a firm which only produces domestically.

Category:

Firm Behavior and Strategies

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Preview Answer

I. 🍃Introduction
- Explanation of the concept of setting up operations in economies with cost advantages

II. Cost advantages
- Lower labour costs
- Cheaper raw material costs
- Cost advantage in international markets

III. Greater market access
- Easier access to foreign markets
- Greater profits
- Fewer trade barriers

IV. Production set up in countries with favourable trade agreements
- Bigger output
- Economies of scale
- Reduction in risk through diversified markets

V. Location near potential markets
- Lower transportation costs
- Wider access to skilled workers
- Increased productivity

VI. 👉Conclusion
- Summary of the benefits of setting up operations in economies with cost advantages.

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