Q. 234.3( 3 Votes )

In what way are MNCs different from national companies? Explain by giving thee reasons.

Answer :

In today’s globalised world, we can find the operation of a variety of business firms in the economy. In today’s mixed economic world, many companies co-exist together. They can be MNCs and national companies. MNCs differ from national companies in many aspects. Some of them are:

Establishment and operations: Multi-National Corporations are large companies established in a particular country and has offices, markets and produces and sells its products in many countries. National companies are firms that operate within the boundaries of a particular country. MNCs have regional offices in different parts of the world. National companies are concentrated within a country. MNCs have to control production in different parts of the country while national companies need to control its production activities within the particular country.

Resources: MNCs have a huge customer base across nations that cater to the requirements of people in different parts of the world. They acquire more resources by purchasing local companies, producing along with local companies or placing orders with local companies. Thus, they have more resources under their command. In contrast, national companies have their customer base across the nation and produce and sell the commodities needed by the nation’s population using its own country’s products and resources.

Technology and management: MNCs will always have highly sophisticated and advanced techniques and technology for production. They will always develop newer cost-reducing methods of production through consistent spending in research and development. Also, they employ the most efficient and professional staffs to handle the organisation and reap huge profits. In contrast, national companies will not have such advanced and sophisticated techniques of production. They mostly take into account the cultural and social background of the country and produce accordingly. Thus, their main aim is to satisfy the needs of the population rather than reaping profits.

Both MNCs and national companies are required for the efficient functioning of the economy. While the latter does not have a big role in globalisation, the former is the forerunner of globalisation in the country.

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