Grade 8C
Discuss whether a firm will always benefit from
an increase in its size.
Time Duration for submitting the Article is:
October 15th to October 20th, 2013
Write here your answer in 500 Words.
Write here your answer in 500 Words.
Expanding a business will grant advantages and disadvantages
ReplyDeleteBenefits of a growing business
As a business grows it gains two major advantages over its smaller rivals. Large firms have more influence over market price. They're big enough to beprice setters.Large firms also often enjoy economies of scale. This means that a business has lower unit costs because of its large size. They can buy raw materials cheaply in bulk and also spread the high cost of marketing campaigns and overheads across larger sales. The disadvantages of expanding a business are financial investment,potential loss of control,and compromised quality. A business needs to invest major capital to the business if it wants to grow. Investing a lot of capital takes up Precious money that can be used to buy machinery,capital,and raw goods. If the comoany grows,it will need lots of money. The business wil reduce the cost of production as much as possible to maximise profit.If the quality is compromised, the business will lose sales,and will lose market shares.Loss of control can occur in the business. If the business expands too quick, the owner can lose control over the business.Losing control of the business will result in big losses. The owner might be forced to close the business. Even worse, the owner might fall into a debt trap.
Business is an organization or economic system where goods and services are exchanged for one another or for money. All business of course want their business to be succesfull include to be big.
ReplyDeleteThere are some ways to expand a business : internal growth : business grows by hiiring more staff and equipment to increase it’s output, the other way is external growth : where a business merges with or take over another organisation, combining two firms increases the scale of operation, and the last method is franchisiing : where a business leases its idea to franchisees, this allows new branches to open accross teh country and internationally.
The advantages of being a big firm are they may influence over market price and they can be the price setters.For example in soft drinks, a large company that influence the market share and be the price setters is cocal cola. The other advantages is large firm also can enjoy economies of scale (a major source of competitive advantage for large firms). It means that a business has lower unit costs because of its large size. They can buy the raw materials cheaply in bulk and spread the high cost of marketing campaigns and overhead accross larger area. For example : a firm can produce a sunglasses each $500 but they sale it at the price of $600, we can see that the firm earn $100 as their profit. Larger firm can charge lower price and enjoy higher profit. Higher compensation packages : afford to offers worker higher salaries and better benefit packages. Stronger Brand Recognition : Customer usually think of stronger rand recognition first when making purchase decisions, compannies with greater brand awareness generally sell more products in the market share. Greater human resources : allow them to pull their resources to accomplish more work.
The disadvantage of large business are difficult to adapt quickly : when someting is discovered, it is sometimes too late to catch the error or another company has beat them to the market and controlling the workforce and ensuring that compliance is being followed : there may be some legal trouble if policies don’t know the mass of workforce, and the last disadvanteg is they have to file more form of taxes than a sole trader or partnership.
The disadvanteg of small business are less recognition : small companies usually have smaller name of business recognition of large business that gain exponsure through location and promotional efforts, small budgets : small business don’t have funds to put into research and development, advanced technology, marketing, and promotions, and high-eng inventory.Bargaining power : inhabits a small company’s ability to get a low cost basis of resale product. Prices : because of bergaining power, deficit and other cost structure disadvantages, small business don’t often compete in price with large business.
The advantages of small business are flexibility : easier to change ideas since only 1 person involve in that business, personal : since usually small business are only controlled by sole trader, passions : business will have more pure passion, independence : the owner can be more independence since only them who role the business, local contributors : make the global economy more recillent, diversity : more small business than big one, more competition and innovation, easier start up: since small business only need a small amount of investment, straight forward : the owner are directly involved with their consumers, and sustainability : lee likely to harm the environment example : the business is a catering, since they are only a small business they only have consumers near to their location so decrease the transport because they just need to walk from their building to their consumer’s building.
A business will not always have a benefit from increasing it’s size. This is because there many results that could happen when you try to increase it’s size or when you have increased it’s size.
ReplyDeleteThe first thing that could happen which is not a benefit is, failure. Failure is the first step to succeed. Your first try to expand will not automatically be a successful. Especially for new entrepreneurs, it will take time to eventually succeed. Unfortunately, some entrepreneurs can’t handle the pressure because increasing a business is not something that you can do within seconds. It takes effort and hard work. Also, even if your business has already increased it’s size, there will always be a possibility that it can suddenly fail. For example, if your business has suddenly become a big company and you decided to produce new goods and dump the old ones that you used to sell. Your customers might not like what just happened so your consumers decrease and you will fall.
Two, as your business increase, therefore will also your workers. As your workers increase, you will have to pay more wages due to having many workers for your big company. But what if you don’t receive the enough money from selling shares? But you still have to pay for your workers, and also the working capital that you need in order to produce goods and services. This would create more problems that are not a benefit to your company but would add more burden. By having this burden it would also affect your business.
Three , if you are a sole trader who owns a big firm, then you will have to do partnerships. To some owners, it would be a disadvantage because they might prefer or work better if they are alone than working with someone else.
Last , you may not attract the specific workers that you want or that will have the right specializations that you are looking for. Looking for those type of workers are also hard to find and may take quite a long time to eventually find the suitable one.
But of course, there will be times when you realize that increasing your firm has a benefit.
One of those benefits could be, earn continuous profit or able to reach profit maximization. Achieving profit maximization is a common objective for most businesses.
Second, can attract more customers to buy your goods and services. Therefore, it will increase your popularity. If this keeps on going, it will also enable market control. This can considered as sales maximization. Banks will not be afraid to lend you money or scared of thinking that they are being risky.
Last, by increasing your business, it will provide you more financial resources to earn more. By earning more, you can invest to buy more machinery goods. This will help you change from having labour to machinery (factor substitution).
Therefore, whether a business wants to increase their size or decided not to, its up to their personal choice. it depends, but there will always be a advantage and disadvantage to something in whatever you do.
At some point of time, many firms will face a dilemma of whether or not they need to grow in size. Firms may undergo two different types of growth – internally and externally. Internal growth, the most common growth of the two, involves new investments and leads to improvements in productivity. External growth, on the other hand, is acquired through merger or takeover.
ReplyDeleteAs firm grows, it may gain more advantages over its other rivals. Firstly, large firms have more influence over market price and may be big enough to become price setters. The ability of a firm to beneficially raise the market price of certain products over marginal cost is also called market power. Market power allows firms to earn more profits, and may help firms to innovate new products and increase productivity.
Secondly, large firms often enjoy economies of scale – business has lower unit costs due to its large size. Economies of scale may lead to increase in productive capacity of a business as well as reduction of the long-term average costs of production. By reducing the average costs of production, business may invest in a more specialized capital machinery, boosting the productivity.
Thirdly, some people believe that large businesses are more secure than smaller businesses and are more likely to be around for a longer period of time. Large companies will usually receive stronger acknowledgement of their brand compared to smaller companies. The increase of brand recognition may help businesses to lower their customer acquisition costs, since acquiring customers may be very costly at times.
Even so, expanding or growing a business often causes unintended consequences. Most common problems experience by an expanding business is the limited access to capital. Expansion requires major investments that may turn bad if a company cannot keep up with the resulting responsibilities or obligations.
Besides that, training and hiring employees becomes crucial as a business grows, because most employees’ skills do not grow with the business. To do this, a business will need to spend more time and money on recruitment.
Another crucial thought before expanding a business is that many chief executives do not survive the changes in an expanding business. Expanding a business may means loss of control over the business.
In conclusion, expanding a business does not always benefit a business, unless you know how to manage an expanding business the right way. Expansion of a business takes a lot of risks, but it may allow a business to enjoy the benefits offered by a larger business.
Anabelle 8C
ReplyDeleteExpanding business may have the benefit and disadvantages to the firm. Many small business owners aspire to grow their business. While there are disadvantages to expansion, the advantages and benefits received from expanding a business may far outweigh to them.
The benefits of business expansion are such as new personnel, it is the opportunity to staff the firm with new qualified people. Since people are often noticed as the most important asset of a company, acquiring new and talented personnel is an advantage to business expansion. These people can help essential processes, bring fresh and new ideas to the organization, also a sense of camaraderie to the organization.
Business expansion often has the advantage of exposing the business to wider audience. This increased crowds of potential customers which can dramatically improve sales, resulting an increase in profitability. Customers, like employees, are important in operating a successful company. When expansion is done properly, it can place the company in the forefront of many customers’ interests.
Successful business expansion can place the firm in a safe position when it comes to acquiring necessary financing. This financing can be a lifeline to the business during expansion process and a fallback after expansion has occurred. A company with increased market shares and a solid financial position can typically acquire financing with less problems or probably none at all.
Expansion of business may give the owner the opportunity to relocate the business, whether it be across town or across state or even internationally. For example, Kentucky, offer tax incentives to companies that bring new business endeavors to their area. Wise business owners should consider the advantages of such scenarios if relocation might be a possibility. Enhanced access to suppliers can also be an important factor when considering decisions.
Another advantage for business expansion is the considerations. This expansion can pose problems for companies especially those who are not ready for the challenges of growth. It is essential that the company, while expanding, view on the profitability level, not just from the sales of growth level. Since the point is to make it more profitable, business owners should review the return on investment from an expansion. In addition, there should be a rational reason for the expansion.
Rapid growth of a business often brings its own unintended consequences. Management also faces the challenge of recruiting employees who can handle expanded responsibilities, without any sacrifices of cost and quality controls in the business. Disadvantages of such are mentioned below.
Compromised quality due to too much growth in a business can lead to declining quality. This disadvantage is caused by the compromise of reputation for quality which then results in lower profits. Toyota is one example, whose executives aimed to own 15% of the global auto market by 2012. In doing so, Toyota would surpass General Motors. However, the company responded by halting production of eight models that accounted for half its domestic profits.
As companies expand, training and hiring become increasingly crucial, because many employees’ skills do not grow with the organization. Failure to evaluate new hires properly increases employee turnover, while creating loyalty and moral issues.
Expansion also requires major financial investments that can probably be worse if company cannot keep up with the resulting obligations. For example, Boston Market franchise, which grew from 20 to 900 stores by 1998. In 1998, the company then closed 200 stores and bought back nearly all its franchises.
The benefits and disadvantages of an increase in size of firms show that business owners should be wise and smart enough to think through all the advantages and possible consequences throughout the expansion of business. Whether the firm would still be able to make profit or vice versa. Therefore, firms will not always experience benefits yet disadvantages in the growth of larger business.
Increasing a size of a firm is a choice made by the owner of the firm when he decides to make his business grow bigger and take it to the next level. Increasing size of firm is risk taking, which will result in losses or disadvantages. But clearly, firm will focus more on the advantages of growing the business.
ReplyDeleteBigger isn’t always stronger or have more control, but some occasions, it is. A bigger firm has more quantity or amount of land, labor, and capital. More labor will increase the production because labor provides help for the business. The more help, more production from the firm and will also reduce the time of making the product.
Capitals are the equipment that a business has to support the production or create the product. A bigger business will have more capital. Capital will also boost the time needed for production. Technologic advancements will also make those capitals produce better quality.
When a business grows, it will have more market share from more sales that the firm provides. Which means, the firm has more chance more market takeover. A bigger firm will have a higher popularity than small businesses. The bigger the business, the more they share themselves to public.
Those are advantages when a business grows in size. But growing a business is a risk taking option. It is risk taking because there are risks that a business has to face when they grow bigger in size.
A business will need more money when they’re bigger. There will be higher costs on labor due to more workers employed for the business. Capitals will also result in higher cost due to more quantity of capitals and technological advancements on capital. These will result in limited capital. Limited capital is a problem because it’s either they fall, or they have to spend their money by either borrowing or using their own.
A bigger choice results in a larger responsibility, and so is a larger business. Larger responsibility of a business is more tasks and debt. Every business needs to borrow to develop its own business. A larger business borrows more. The more they borrow, the more debt they owe to another business, which will result in a bigger awareness.
Not everyone in the business will work well in the business, especially a bigger business. An example of this concept is taking a tutor or lesson, the student will work or understand better if he goes to a private lesson, which is smaller, than a class with many people, which is bigger. In business, it will be harder to organize or maintain those employees.
A bigger business will have to balance themselves with other business. It means that their quality must be equal to other business of the same level. If a business isn’t ready to compare themselves with other business, it wont be worth it. They will need to have higher quality and kept on innovating their product.
My conclusion is that, growing size of firms can lead to advantages and also risks they had to face.
Kevin 8C
When firms have enough money with a stable position, they would expand their business. Firms can expand in size internally and externally.
ReplyDeleteFirms expand internally by expanding its scale of production, through the purchase of additional equipment, increasing the premises and hiring more labor. Certainly, to finance this, the owner will need to use the profits to borrow money or might need to sell their shares.
Firms grow externally by take over or merger. Merger is when the owner of one or more firms agrees to join. Take over is done by buying enough shares to take overall control.
A merger would increase a firm’s size as they will have more capital and limited liability.
Business objective may change overtime. For new business, survival is the most important objective. Most private firms usually aims for profit maximization having to lower their cost of production. Most objectives aimed by owners when expanding their business are profitability and to increase market share.
Profitability is the ability to continually generate revenues from the sale of its goods and services that exceeds the most. Commonly, when expanding its business, owners would have to maintain the average amount of profit earned. Most private firms would aim for profit maximization, selling their goods and services at a high price, having to manufacture it at a low cost. Most large firms would need to reconsider their option of profit maximization as they would need their sales of production to go up. Thus, firms would need to focus more on attracting consumers to buy their goods and services.
Being a large firm is beneficial as banks will trust them as they know that the firm is able to pay any debt or loan being borrowed. Comparing to smaller firms, banks will not be convince to lend money to them, having small capital within them makes them not as trustworthy as large firms’ owner.
The increase of market share is done by measuring the proportion of total sales revenue or turnover that is attributable to the firms. Having firms to do this, they will achieve higher sale and in the future, an increase in price to gain more profit.
Firms can grow too much, when they try to expand the size and scale of their production too much. An excess of growth in size might have its own problems, which is diseconomies of scale that can result in production problem, higher costs and lower profit.
Large firms require a variety of material and components of power for production. They may experience scarcity of material that might delay its scale of production. It might be difficult to manage a large firm having their factories or offices extended to different location with varying products or goods.
Most large firms uses automobile machines to increase the rate of production with the help of this century’s technology. Some large firms are unable to engage enough workers with the right skills. These firms will have to give out more money on training their workers and extending their payment so that they will not leave the company. Firms will need more laborer, they would have to avoid the decrease of employees.
Large firms may find it hard to constantly attract new customers because their products are too systematic and they have outgrown their market. For business expansion, firms would need to raise finance, they may need to sell part of their ownership stake to other investors.
As my conclusion, firms growing in size will benefit them as it will increase their market share and profit. Thus, there are still consequences a large firm will have to face which is diseconomies of scale leading to other problems.
Monique 8C
There are some ways for a firm to grow in size and by growing in size will effect the activities of the firm, for example the workers will be more tired because of the work that they must do more and also the owner has a larger responsibilities for the firm. The larger the firm is in size, then the more responsibility that the owner of that firm will have. And the larger the firm, the more worker should be hired so the workers will not be too tired.
ReplyDeleteNow I will discuss some ways of how a firm can grow in size and also the effects of each ways in an increasing firm size. The first way is by hiring more workers or employees, the more worker a firm will employ, the faster the work will be because there is more workers. But if they don't want to increase their size by hiring more workers, they can buy more capitals, that's the second way of increasing size of firm. Capital is the machine, so it can work longer than labors or employees and the capitals also can produce more products much faster than the labors. Sometimes the firms may want more labors to work for them, so they buy less capital but there are also some firms which wants more capitals to be employed, so they employ less employers and buy more capitals in accordance to increase the size of their firms. The third way is by growing internally. It can grow internally by buying more capitals and hiring more labors to work for the firm.To finance this the owner will need to use the profits to borrow money from banks or sell their shares. The fourth way is by growing externally. This way is commonly acquire through merger or take over. Merger is when owner of one or more firms agree to join while take over is done by buying enough share to take overall controls. Those are the four ways that i can tell you about how we can increase the firm's size.
So the conclusion is that there are some ways to increase the firm's size and each of the ways have their own effects on each other. There will be consequences that the firm will face if they would increase the size of their firm but there is also the advantages of increasing the size of their business.
There are positive and negative that we get if we increase in size will effect firm, some of the positives are more profit, famous, etc. Some of the negative side of effect because of increase in size are out of control, short on capital, less demand, etc.
ReplyDeleteThe first advantage is more profit, if you have more place or in more than one country, so there are more people who buy the product, the profit is bigger because we can produce and sell more, so if we get more profit we can increase more in size.
The second advantage is famous, if your firm is famous, so there are more possible chance that more people buy your product, because every people that know your product, if people know about something they will start with curious and buy, if when they already buy , if the product is good people will tend to buy it again and again and almost everone if know about good product, they will tell the others and the people that told by the others will do the same thing.
The third is trust, if you have a bigger business, more people trust the firm, some of the one who will trust is bank, consumer, etc. Bank if you have big company, so the bank can trust the firm and lend big amount of money. Consumer, if consumer trust your firm thats mean that they will buy your products. The third is investors, if the investors trust the firm, so they will invest their money on your business.
the first disadvantage isshort on capital, if your business is short on capital, so you cant operate or run the business, because we need more money to buy the resources to make the product, maybe they can borrow from the bank, but if the business is not that profitable and they cant get the money to pay for the loan and intrest, so your whole business include the capital can be taken by the bank.
The second disadvantage is out of control, so if you only have worker, but you dont have manager or etc. So you have to control it all by yourself, it is still good if you inly have one or two and it is in one city, wjat if you have five and all of them in different countries, so you have to travel to all of that countries, for example every week, if you cant go to that country for every week, so you cant handle it, if you want to make it easier, so you have to let go some and try to focus on the one that you keep.
The third is less demand, if there are less demand, so you cant sell more even you have multinational firm, so it is a great loss for the business, because fo example the total cost for one month for one country is 30 millions and you have fife countries so the total is one hundred fifty million rupiah, but you total revenue is only 75 million rupiah for the whole business per month, so each month your business loss seventy five million per month.
There are two ways a business can increase in size, merge and take over. If merge is you agree with the other business to combine the two business and form as one. For example :cimb bank with niaga bank, now they both are formed as one and called cimb niaga. If take over is a business or people or an organisation that buy more than fifty percent of the company, if you have more than fifty percent thats mean that all of the desicion is taken by you.
The conclusion is that there are fifty percent chance that it will bring positive impact or good impact and there are fifty percent chance that your business will get negative impact or bad impact fom it.
Increasing in size is among the top priorties of a business. In all industries, there are firms of different sizes of different stages of growth. There are many ways to measure firms : How many workers and capital they employ, their volume or output of sales, and their market share.
ReplyDeleteA business can grow in size through by hiring more staff and capital to increase their output, this method is called organic or internal growth. However, a business can also ‘join together’ or merge, thus combining and increasing each of their scale production. The last method is by the ideas of franchising. This allows the opening of new branches opening national or worldwide.
When a business grows it receives two main advances above their smaller business rivals. Large firms gets more influence and control over the market price. They're size enables them to be price setters.
The larger a firm is the more often they enjoy economies of scale. This states that a firm has lower unit costs because of its large size. Larger firms tend to produce more goods and services. As a result, they gain more profit and thus less costs. Firms can buy raw materials cheap and easily, and also spread the high budget of marketing campaigns and overheads among other larger sales. Economies of scale are major sources of competitive factor for large firms
Firms, especially have to decide whether or not they really want to expand. Expansion is risky, despite the advantages mentioned above. There's always possibility that the expansion plans and procedures can fail and result in a loss rather than making profit. Owners will face hardships and worse off than before the growth of the business.
The risks that expansion can bring means that some owners are not reluctant to increase. It is better to stay small and earn a relatively risk-free profit for them. Potentially, there lies some drawbacks that hold firms to avoid growth. Small businesses can have disadvantage to large costs compared to their larger rivals that benefit from economies of scale. Because it is unlikely for small firms compete with the low prices set by their larger rivals, they have the target of providing better service and quality to attract consumers. (cont)
However, expanding business does not always guarantee a disadvantage-free condition. The necessity of firms pushing revenues to higher levels can ‘damage’ their resources to its breaking point. Firm’s management also faces the challenge of employing workers that meets the needs of the firm, without sacrificing the quality or cost controls it requires to stay in business.
ReplyDeleteEmploying and training more workers makes it more challenging when companies expand since many of workers' skills do not cooperate with organization's growth, according to Edward Hess, University of Virginia's business professor in a 2010 interview "Bloomberg Businessweek." After he studied some 54 companies in 23 states, Hess discovered employment errors when one likely overcomes rapid growth. As example, a bunch of companies needs two until tries before finding the right person to do a job. The failure to do so increases employee turnover and creates morale and loyalty issues.
Expansion also cited many amounts of financial investments that can turn wrong when a firm fails to keep up with the resulting activites. It eats up a lot of cost and many loans to be paid. An example is the franchise of Boston Market, rapidly grew from 20 to 900 stores in 1998. However, when little amounts of sales slagged many stores, it unables them to repay the debts. As a result of growing too much, the company closed 200 stores, receives back nearly all their franchises and seek Chapter 11 of bankrupt protection.
As the business grows and grows, it becomes much harder to manage all of them. Often, CEOs fail to undergo once the firm outgrow their original association. Firms need to have strong involvement and control so the business can still run well, especially when expansion. If they fail to do so, the business may not continue to be successful and suffer loss of control.
In conclusion, expansion acts as one of business' man objectives. There are a variety of ways to increase in size, such as employing more people. However, they face advantages and disadvantages along the way, examples of disadvantages are uncompromised qualities, financial challenges, employment turnover, and a loss of control. It is not necesarrily possible for business to always gain favour during expansion.
Most of the time expanding and increasing the size of your own firm or expanding someone else's business is considered to be top priority for the owner of the business but however there are such cost to expanding such as if you expand to big your firm can't cover the cost from the expansion some firms may go bankrupt if the expansion is not handled well but there is a certain point where a company do a successful expansion and end up having higher sales but in most cases it doesn't happen and there is another disadvantage which is if the owner is new and expanding without taking measures the owner expands too much and end up cannot control his/her own company and they may have no or less control of his/her company because it's to big too handle and it may result in the bankruptcy of the company only due to careless measuring and decision making but also if a company remains small or became to small in a market then the company won't be able to keep up with the customers demand and have to work too hard and that may result in unfullfilment of the customers demand and the customer leaves and because there is no more customer the business maybe have to close down
ReplyDeleteAnd but from all those disadvantages there are indeed some advantages such as : an increase in profit from the increasing sales if the expansion is succssesful and you sales increase and by then u will have an increase in profit and also there will be another advantage which is having bigger proportion of the market and that will also only occur if the expansion is successful because you are expanding you business it means that your company is getting bigger and you have more assets which means that your company's percentage in the market has increase and your company will also worth a lot more because of the aditionall assets
ReplyDeleteFirms do not always benefits from increasing their size. There are benefits and risk that firms should face when they increase their size. Increasing he size of the firms may make firms to have more profits and become more popular. But increasing in size can be expensive and risky. Firms can increase their size by hiring more workers to increase their output produced, two firms joining together to become a larger enterprise, opening branches across the country and outside the country, etc.
ReplyDeleteLarge firms can enjoy internal economies scale and external economies scale. Internal economies scale is that large firms may have reduced their unit costs because of their large size. They can buy raw material with cheap prices when they are buying in large amounts and sell them with larger sales. Internal economies scale includes – purchasing economies, marketing economies, financial economies, technical economies, risk-bearing economies.
Large firms may also have external economies scale with rival producers as a result of their businesses being large. External economies scale includes access to skill workers. With having more workers hired, firms will have larger output produced. Ancillary firms are located near other large firms to provide them with better technologies and services needed. There may be joint market benefits. It is when other firms are producing high quality products and it may share better reputation.
The larger the firm, the more market share they will have in the market. This is also called as the market power. Firms with market power are able to make price for their products as well as maintaining their market share at the same time.
Managing firms is one of the disadvantages of firms’ growth. Managing and controlling large firms is hard and need lots of money. Managers of the firms in different organizations may have different ideas to share and this will cause disagreements among them. This will slow down decision making for the company.
The most common problems that firms face in increasing their size is that they are lacking of capital; limited access to capital. As expansion needs large amount of money, when the firms are not able to pay the large amount of money, expansion will be insufficient.
Large firm should have many workers hired. Some firms may not be able to give new employees the perfect training, as they do not have enough money. They may also have problems when giving employees wages when they are lacking of money and this will cause in unlimited liability.
So, there are benefits and disadvantages for firms growing in size. Most will succeed in their growth but some may have financial problems or other problems that they will face. Firms may also grow too much and will make them to have unlimited liabilities.
Charlotte 8C
There are some advantages and disadvantages of MNC. MNC is a company that are located in more than two countries. The advantages for the other countries or not the home country are technological advancement, more money to the other country, unemployment level decrease , etc. The disadvantage for the other countries or not the home country are people tend to buy to the mnc companies rather than local companies, etc. The advantages for the home country are more profit, more popular, etc. The first advantage of the other countries are technological advancement , in germany the technology is very advance, so when it have store in a country, so the country will start to try to make the duplicate of that technology or machine, so it could be categorised as raw model for the other countries. The second advantages for the other countries are more money to the other country, because when the mnc company pay tax, the tax will be more expensive than the tax for local companies, so the miney of that tax can be used to subsidy the local companies, so that it will not lose from the mnc companies. The third advantage for thevother countries is the unemployment level will decrease, one big company Can hire over one thousand people as their workers, so every big companies are created, the less the unemployment level will be. The first disadvantage of the other countries is people are tend to buy products from the mnc, because they think that every international products are better that the local products are worst, for example indonesia. Hire over one thousand people as their workers, so every big companies are created, the less the unemployment level will be. The first advantage for the home country or mother country is more profit, they will get more profit, because just like what we discuss before that local people trust mnc more than local companies, because they think mnc products have better quality than local. The conclusion is that there are some advantages and disadvantages for the other countries, but there are only advantages for the home country.
ReplyDelete