Types of organisations Flashcards
multinationals (17 cards)
What is a multinational company?
A multinational is a company which has its headquarters in one country but has production facilities in other countries.
Examples of multinationals include Apple, Adidas and BP.
What is one advantage of being a multinational?
Access to a wider market – producing overseas expands the market for the company’s product, leading to increased sales revenue, market share, and profitability.
How does producing overseas affect brand awareness?
Producing overseas increases brand awareness beyond the home country.
What is a cost-related advantage of multinationals?
Cheaper production costs – the cost of land and labour is cheaper in developing countries, such as lower wage rates.
What is meant by economies of scale?
Cost per unit can be lowered through specialisation.
What advantage do multinationals have regarding suppliers?
Greater access to cheaper suppliers and skilled workers.
How can tax policies benefit multinationals?
Tax breaks – different nations have different levels of corporation tax.
What trade-related advantage do multinationals have?
Avoidance of trade barriers such as tariffs and quotas.
What financial incentives might governments offer to multinationals?
Accessing government grants – some countries offer financial incentives to locate new production facilities.
What is a potential benefit of relaxed legislation in other countries?
Legislation in other countries may be more relaxed.
How do multinationals impact local economies?
Creates jobs and boosts the local economy of developing countries.
What is a disadvantage of overseas production work?
Much overseas production work is deskilled jobs that may be low-paid, repetitive assembly line work.
What happens to profits made by multinationals in host countries?
Profits are not retained in the host country; for example, profits made by Apple from production in Vietnam go back to HQ in California.
What risk is associated with relaxed legislation?
Relaxed legislation may lead to cutting corners, such as health and safety laws.
What social responsibility issues may arise with multinationals?
Social responsibility may be overlooked if there are no environmental laws in place.
What accusations are often made against multinationals regarding their workforce?
Multinationals are often accused of exploiting the workforce by enforcing minimum wages and longer hours.
How can multinationals influence national governments?
Multinationals can exert influence on national governments by threatening to pull out of a country if they don’t get favorable deals on workforce or overheads.
