II. Very Short Answer Questions

 

Question 1. Define Multinational Company.

Answer: "A multinational corporation owns and manages business in two or more countries." — Neil H. Jacoby

 

Question 2. Write any two advantages of MNC.

Answer: 1. Low Cost Labour: MNC set up their facilities in low cost countries and produce goods/ services at lower cost.

2. Quality Products : The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.

 

Question 3. Give two examples of MNC.

 Answer:

1. Coca — Cola Corporation

2. Unilever

 

Question 4. Name the type of business enterprise which operates in more than one country.

Answer: A multinational corporation is known by various names such as: global enterprise, international enterprise, world enterprise, transnational corporation etc.

 

III. Short Answer Questions

Question 1. What are the advantages of MNC's?

Answer: 1. Low Cost Labour: MNC set up their facilities in low cost countries and produce goods/ service at lower cost. It gains cost advantage and sells its products and services of good quality at low cost.

 

2. Quality Products: The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.

 

3. Proper Use of Idle Resources: Because of their advanced technical knowledge, MNCs are in a position to properly utilize idle physical and human resources of the host country. This results in an increase in the National Income of the host country.

 

4. Improvement in Balance of Payment Position: MNCs help the host countries to increase their exports. As such, they help the host country to improve upon its Balance of Payment position.

 

5. Technical Development: MNCs carry the advantages of technical development to host countries. In fact, MNCs are a vehicle for transference of technical development from one country to another. Because of MNCs poor host countries also begin to develop technically.

 

Question 2. What are the disadvantages of MNC's?

Answer: 1. Danger for Domestic Industries: MNCs, because of their vast economic power, pose a danger to domestic industries; which are still in the process of development. Domestic industries cannot face challenges posed by MNCs.

 

2. Transfer of Outdated Technology: Where MNCs transfer outdated technology to host nation, it serves no purpose.

 

3. No Benefit to Poor People: MNCs produce only those things, which are used by the rich. Therefore, poor people of host countries do not get, generally, any benefit, out of MNCs.

 

4. Danger to Independence: Initially MNCs help the Government of the host country, in a number of ways and then gradually start interfering in the political affairs of the host country.

 

5. Deprivation of Job Opportunity of Local People: MNCs may not generate job opportunities to the people of home country.