Q. 125.0( 1 Vote )

Nearly all major multinational are American, Japanese or European, such as Nike, Coca-Cola, Pepsi, Honda, and Nokia. Can you guess, why?

Answer :

Multi-National Corporations are large companies established in a particular country and has offices, markets and produces and sells its products in many countries. They try to integrate and control the production across countries where close markets, low labour and high profits are earned. Nearly all major multinational are American, Japanese or European. The main reason for the dominance of developed countries as MNCs are:


• Large size: MNCs are huge organisations that own and control huge resources in terms of capital, technology, people and information. They have large physical and financial assets and bulk sales. They are very mammoth organisations whose monthly budget may even surpass the annual budget of countries. Such a massive quantity of resources can be amassed by developed countries.


• Multi-country operations: MNCs operate in many different countries. They have a very vast marketing network. Their assets may be diversified in many countries. Thus they carry out their production, marketing and sales in many countries, even in all the continents. Only developed countries like America, Japan or Europe has the potential in terms of resources and management to ensure these large scale operations.


• Sophisticated technology and professional management: MNCs will always have highly sophisticated and advanced techniques and technology for production. The 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. This helps them to reap huge profits. Only developed countries like America, Japan or Europe has the potential in terms of resources and management to ensure rapid technological developments.


• Mighty organisations: Mostly MNCs are very powerful organisations who try to retain their economic and political powers through consistent mergers and acquisitions. They may have some degree of monopoly due to economic and technical advantage. Only the developed countries have an influence because of their political and economic power to influence the decision of other economies.


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