The advantages & disadvantages of MNCs

e MNCs from the viewpoint of the home country are:

(i) MNCs usually gel raw-materials and labour supplies from host countries at lower prices: specially when host countries are backward or developing economies.

(ii) MNCs can widen their market for goods by selling in host countries; and increase their profits. They usually have good earnings by way of dividends earned From operations in host countries.

(iii) Through operating in many countries and providing quality services, MNCs add to their international goodwill on which they can capitalize, in the long-run.

Limitations from the Viewpoint of the Home Country Some of the limitations of MNCs from the viewpoint of home country may be

(i) There may be loss of employment in the home country, due to spreading manufacturing and marketing operations in other countries,

(ii) MNCs face severe problems of managing cultural diversity. This might distract managements’ attention from main business issues, causing loss to the home country.

(iii) MNCs may face severe competition from bigger MNCs in international markets. Their attention and finances might be more devoted to wasteful counter and competitive advertising, resulting in higher marketing; costs and lesser profits for the home country.