How Multinational Companies can affect the particular economy.
How Multinational Companies can affect the particular economy.
Grade 8A
A large, capital-intensive German company producing electrical goods decided to establish a factory in Indonesia.
Discuss how might the establishment of the factory will affect existing Indonesian companies and the Indonesian economy?
Time Duration for submitting the Article is:
October 21st to October 27th, 2013
Write here your answer in 500 Words.
Write here your answer in 500 Words.
A multinational corporation (MNC) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation and they play an important role in globalization.
ReplyDeleteThe disadvantages for the home country is a multinational corporation will contribute to unemployment because they will produce the goods where the worker is ready to get low wage but in Germany it’s very hard to pay people in low wages but in Indonesia they can pay the worker in low wages because there is difference in currency rates such as if a person is paid € 200 in Germany will not accept it because it won’t fulfil their basic needs because the price of basic needs are expensive in a more economically developed country such as Germany. But in Indonesia if a worker is paid for € 200 they will accept it because € 200 is already 3 millon rupiah so people will accept it and the company will decide to build a factory in Indonesia because of the low wages accepted by the worker in Indonesia. The second one is that there will be less export products produce in Germany as the factory is in Indonesia this will affect the balance of payment for Germany tends to deficit, and lastly the government of the home country is that they will have less tax income for the government of Germany because factories were moving to another country which people are ready to have less wages like Indonesia, so government will lose the tax income from the direct tax which is tax on person’s or corporate income which when it’s already cutted it’s already a disposable income or income which person are free to do with it, they can save, consume, or borrow.
The advantages for the home country is that multinational companies create opportunities for marketing the products produced in the home country throughout the world, and home country can also get the benefit of foreign culture brought by MNC's.
The advantages of multinational company for the host country is that there will be more employment because the company build a factory in the host country which will absorb worker and reduce unemployment. There also an improving balance in payments because by the investment of multinational company they will increase the capital of the country by putting tax on them from the company and direct tax on every person income as well as decreasing import demand and increasing import supply. There’s also an increase in national reputation if a multinational companies have a good pervective about the host country which can encourage another multinational companies to ivest in the host countires. The multinational companies will teach them how to use machines, robots, and other cutting-edge technology and enable the local worker ot do it which is a good benefit of transfer of technology.
But there’s also some disatvantage of multinational companies to the host countries such as pollution because companies want to press their cost of production to be cheap and efficient so they often throw their waste to river which can be harmful for the animals and also people living nearby. They also sometimes disobey the safety precautions and can cause accident which cause disablities or even death. There’s also can be a competition between multinational companies and local companies, and often local business fail to compete with big multinational companies because they are big and strong. There could be a cultural and social impact for example people are eating fast food instead of healthy food in Mcdonalds which can make people unhealthy. They also try to cut their cost buy pressing worker wages.
The conclusion is MNC’s are good investment in a country
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ReplyDeleteA German company establishing a factory in Indonesia would be referred to as a multinational company. Multinational companies are companies which operate in more than one country. Multinational companies are generally very large and profitable. Examples of multinationals are McDonalds and KFC in the fast-food industry, and BMW, Mercedes-Benz among car companies. Expanding a business would most likely bring benefits to the firm, such as being able to lower production costs if they set up a factory in a country with lower economic growth, and reaching a bigger market. However, multinationals would also greatly affect the host country and its competitors in the country.
ReplyDeleteIt is clear that multinational companies can provide developing countries with financial infrastructure that is critical for the economic development of the country. A multinational company is a source of tax revenue for the host country. Profits from goods and services are usually accountable to local taxes which are crucial in providing a source of revenue for the local government.Multinational companies may provide employment for the host country. FDI, or foreign direct investment, will provide the host country with employment benefits as most employees will be domestically recruited.This benefits may be relatively greater if governments attract firms to areas with high unemployment or a good labour supply. Multinationals, especially capital-intensive ones, will bring the host country technology and production methods which is probably previously unknown to the host country. Workers will be trained to use this new technology and may benefit the local firms in the host country. This process is known as technology transfer. If a multinational provides goods for the domestic market as well as to export, the local population will gain a wider choice of goods and services and prices may possibly be cheaper from their imported substitutes. The presence of a multinational company in a country may also attract other large corporations into setting up multinationals in the host country. This may increase the national reputation of the country.
However, multinationals, in reality, may not always affect the host country positively. The may exploit the resources in the country and increase the neediness of the people. The establishment of a large, multinational company may bring threats to the local companies and the host country’s economy, in this case Indonesia. Multinationals can monopolize the market, and may threaten small firms. In Indonesia, traditional markets are dying out because there are some large supermarkets which attracts its customers by providing better facilities to customers, such as air conditioning. An well-known example is Carrefour. Also, multinational companies may sell goods and services at a cheaper price compared to traditional markets, which may attract customers buying their goods instead of other, smaller firms in the host country. This is provided the fact that they can produce or buy goods in large amounts, so they can get discounts and lower the average cost of production, while traders in the traditional market do not have sufficient capital to do so.
The company mentioned in the passage in capital-intensive. Therefore, it will employ more capital than labour. It would not help reduce the unemployment problems in Indonesia, and instead may bring dependency to the host country by bringing capital which is innappropriate for the country’s needs. The jobs created in the local area will be low-skilled as the company would employ expatriates for more senior and skilled workers. The production processes of the multinational company may also create a bad environmental impact on the host country. Multinationals want to produce in ways as efficient and cheap as possible, and may not always be the best environmental practice. They may use harmful chemicals or throw waste to the nearest water body or wasteland without processing it first. Multinational companies will sometimes invest in a country just to gain access to the plentiful natural resources and raw materials, and host countries may allow them to do so because they tend to be more concerned about the short-term economic benefits instead of the long-term costs to the country in term of depletion of natural resources. Another disadvantage multinationals may bring is transfer pricing. Multinationals aim to reduce their tax liability to a minimum. They might do this by transfer pricing. The main goal of transger pricing is to reduce tax liability in countries with high tax rates and increasing them in countries with low tax rates. They can do this by transferring components and partly-finished goods between their manufacturing and operations in different countries and different prices. When the tax liability is high, they transfer the goods at high prices to make the costs look higher. When the tax liability is low, they will transfer the goods at a low price. This will reduce their overall tax bill. Multinational companies generally export their profits back to their home country. Therefore, it will not bring much benefits to the host country. Multinationals may also neglect the health and safety of their workers. There has been various accusations that multinationals are neglecting health and safety in countries where laws and regulations are not as strict. The last disadvantage possibly caused by multinationals is the cultural and social impacts to the host country. Large numbers of foreign businesses may overshadow the local customs and traditional cultures.
ReplyDeleteTo conclude the points mentioned, multinational companies may bring benefits to the country, but the government must be strict in taxation and rules and regulations of setting up a multinational in order to prevent exploitation.
The passage mentions a ‘large, capital-intensive, German company’, which suggests that it is a multinational corporation (MNC or simply multinational). A Multinational corporation is an enterprise that has operations and/or is registered in more than one country. They generally locate their headquarters in the region where the corporation first established or simply ‘country of origin’. Multinationals are very big companies and some of the biggest joint-stock companies in the world, as they often sell many billions of dollars worth of goods or services, and employing thousands of employees worldwide, but generally hire workers from its host country. A host country is the region or country where the multinational corporation is establishing and/or having production, where in the current case, the host country of the German multinational is Indonesia.
ReplyDeleteIndonesia is currently a developing country (LEDC: less economically developed country), and when a modern and large multinational company from Germany decides to establish its production and operations in Indonesia, it brings up a number of advantages for both the multinational, the host country’s economy, and the existing companies in the host country, but we will only discuss the effects on the companies and economy of the host country. As the German multinational is selling electronic goods, it may attract certain high-class customers or individuals who want it, and there is a possibility for it to be successful. If that happens, local firms can make complimentary goods so some of the multinational’s consumer may consider buying those complementary goods. Complementary goods are goods that help customers become more satisfied with another good, for example, sugar is a complementary good of coffee, but tea can be considered as a replacement good for the coffee. If the complementary goods are bought by many consumers, the local firms can benefit from that and can be successful, and then they can pay more tax to the government and increase their (govt) revenue. As big multinationals earn large profits, the government can receive more money without increasing the tax rate, assuming the multinational is cooperating, and the government isn’t corrupt. MNCs can improve the balance of payments; inward investment will usually help a country's balance of payments situation. The investment itself will be a direct flow of capital into the country and the investment is also likely to result in import substitution and export promotion. Export promotion comes due to the multinational using their production facility as a basis for exporting, while import substitution means that products previously imported may now be bought domestically. Generally, multinationals will bring with them technology and production methods that are probably new to the host country and a lot can therefore be learnt from these techniques. Workers will be trained to use the new technology and production techniques and domestic firms will see the benefits of the new technology. This process is known as technology transfer. If the multinational manufactures for domestic markets as well as for export, then the local population will gain form a wider choice of goods and services and at a price possibly lower than imported substitutes.
It may seem to be very advantageous for the host country, but those advantages generally happen under certain situations and in reality, there are more disadvantages than there are benefits if a capital intensive multinational firm builds a factory in Indonesia. The most obvious disadvantage is natural resources exploitation and more pollution. As Indonesia is not a developed country, laws and regulations to protect the natural environment may be weak or not enforced at all. Natural resources exploitation may not allow other local firms to extract those resources and may endanger those firms, especially small firms. Even though multinationals can benefit firms producing complimentary goods, but will have a severe impact on firms producing replacement goods that must compete with the large multinational. Multinationals will always aim to reduce their tax liability to a minimum. One way of doing this is through transfer pricing. The aim of this is to reduce their tax liability in countries with high tax rates and increase them in the countries with low tax rates. They can do this by transferring components and part-finished goods between their operations in different countries at differing prices. Where the tax liability is high, they transfer the goods at a relatively high price to make the costs appear higher. This is then recouped in the lower tax country by transferring the goods at a relatively lower price. This will reduce their overall tax bill, but will have significant impact on governments which now can’t improve public services. As this German multinational is capital intensive, which means they use more machinery and equipment rather than employees to produce goods, they would not help reduce unemployment in the host country, and Indonesia has a high unemployment rate. Lastly, partly as a method of avoiding tax, most multinationals are likely to repatriate their profits to their country or origin, leaving little financial benefits for the host country.
ReplyDeleteTo conclude what we have discussed, multinational corporations may seem to bring many advantages for the host country, but in reality, there are way more disadvantages than benefits for the host country, but governments still try to attract multinationals in hope of bringing benefits.
Ivan Alexander
8A
Multinational company is a firm that has business operation in more than one country. Multinationals are some of the largest joint stock companies in the world, because they are selling many billions of dollars of worth, of goods and services and usually they employing many thousands of workers globally. In this case, German company who producing electrical goods, decided to establish a factory in Indonesia. This can affect the particular economy in Indonesia.
ReplyDeleteUsually, multinational bring many benefit to the country itself, they provide jobs for unemployment people (the local workers), which can help the people to earn money, to buy goods and services, to satisfy their needs and wants. They also bring knowledge and skills into the country, which can help domestic firms to improve their own productivity, multinational company also have to pay tax in the domestic country and it can increase the income for the country itself. They also can increase export earnings through international trade. But, in this case, German company which producing electrical goods change it to other way around. It is said that they are capital intensive, which means they employ relative few workers instead use machinery and computer to automate their production. So, they are not provide jobs for unemployment people in Indonesia, they are not reduce the unemployment people. They also make the natural resources in Indonesia, to make their product, which can cause the exploited of the natural resources and the environment in Indonesia, damaged by some of the multinationals company. With this, government in the domestic country make rules and regulation to protect the natural resources. In this case, with the established of German company in Indonesia, it makes company that has been established previously to feel that there is new competitor. German company also switched the profits between countries, so that multinationals company can avoid paying tax. Multinationals will often move or repatriate their profits from their business units in different countries to those countries with the lowest taxes. They may also avoid taxes altogether in some less developed economies country with poor tax collection and legal system. While for the dosmetic country, tax is important because it can be used for the development of their country. Multinational companies also may use dangerous chemical substances that can be harmful for the environment surround the company. But there will be advantage of multinational company in Indonesia, the establishment of a German company might be bringing Indonesia a better national reputation. Government in Indonesia give rules and regulation so that the multinationals company want to pay tax, and if the multinational company pay taxes, it can be the source of tax revenue for the Indonesian government.
Against the statement above, national governments will often compete with each other to attract multinationals to locate operations in their coutries. However, multinationals are some of the big and powerful company from the joint stock company. So, they may create problems in their host countries.
In conclusion, German company that establish their company in Indonesia as a multinational can affect the Indonesian companies and the Indonesian economy. It can create some advantages and problems, with this, it leads government in Indonesia to make rules and regulations.
vienetta christina
8A
A multinational company from Germany which is capital-intensive company decides to establish a factory in Indonesia.Multinational companies are companies that has a manufacturing factory in various countries around the globe.These multinational companies can affect countries by establishing their factory in that certain country.They can affect the countries' economy as well as existing companies in a country.
ReplyDeleteThat German company can affect the existing companies in Indonesia by monopolizing the market in Indonesia,they can monopolize the market easily if they have a big name and if they are well trusted by Indonesians.Because they monopolize the market of a certain product,their rival companies will lose their old standing and they won't survive.Other companies may also get discouraged and will later lose their moral.The government will act and will help these companies to survive.They will give them more money and advantages,but if too much companies are destroyed by that German company,the government would have less money for other important things and will affect Indonesia's economy.If the company decided to not pay taxes to the Indonesian government then Indonesia's economy will also fall because now after monopolizing the market they won't pay taxes to the government causing them to have less money.If that German company decides to take all the resources from Indonesia,existing companies would be in a tough situation because they either have to import resources or they can't produce anymore.This can threaten their standings and they would be less likely to survive.By establishing a factory in Indonesia,they can pollute places nearby the factory,and the government would most likely spend more money in ''cleaning'' those places and would further decrease the amount of money the government has.
But,that German company can affect Indonesia positively.As a labor-intensive company they have to employ workers from Indonesia,which can reduce the number of unemployed people in Indonesia.If they decided to make more foreigners work in their company,they would spend more money for wages so they would most likely decide to employ Indonesian workers.As the number of unemployment falls,Indonesia's government won't need to spend more money to help unemployed workers survive.They can focus to use their money for more important things.By employing workers from Indonesia,they would give Indonesians more knowledge in electronics.This can benefit existing Indonesian companies in the future because they can take advantage of the knowledge given by the Germans and can continue to grow.By coming to Indonesia,they can make more Indonesians spend money on their product,by doing this they can provide more taxes to the Indonesian government to further increase Indonesia's economy,this can happen if they decided to give taxes to the government.They can also provide more money for Indonesia's government because they more they spend on producing goods,the more tax the government will probably charge them because they're not an Indonesian company and the more money the government would get,the more money the government has the better the economy.
The conclusion is that the certain German company can make Indonesia's economy rise but it can also make it fall.They can also threaten the standing of an existing Indonesian company but they can also benefit certain existing Indonesian companies in the future.So by making a multinational company come to your country can benefit your countries' economy and can also benefit existing companies in your country
Jovan Pan
8A
The multinational company also known as MNC is a big company. MNS is a firm that has business operate in more than one country but usually its headquarter is in country of origin. Many of business goal is to be a MNC because it can increase the business profit from other country. one of the example of MNC is Coca Cola Company, Samsung, Kraft, Nestle, Pepsi, and many more. The MNC is divided into some main sector like oil and gas, retailing, automotive, electronic, and various. The growth of the business can have some advantage and some disadvantage. The business growth can affect the Indonesian economics and Indonesian existing company. The case is if a large, capital-intensive German company producing electrical goods decided to establish a factory in Indonesia and the advantage and disadvantages are:
ReplyDeleteThe disadvantages are if the German company grow too much and monopolizing the electronic market in Indonesia and it can eliminate other company, lead the company to bankrupt, and make a big loss to the other company and its risky to other company. To make multinational company is hard to set up and start the business because when they want to build a building they must pay the tax for building and follow the government rules and regulation in the certain area. They need to pay taxes because if they don’t pay the taxes the government will shut down the company and they must pay all debts and the wages for the employee. They also cannot just take the resources from Indonesia because they must ask government first because its against the law. There are some benefits or advantage to the company itself and the people in that area. The advantages are they provide jobs and reduce employment of the country because when they open the company in another country they must need many employee from the other country. The other is they can increase the profit from selling goods and producing goods. The profit per year can be high enough until a million dollar. Reduce the average cost of production per unit because they have many employee to do the job. Minimizing cost of transport cost because they have different office location near to the sources of material or consumer. They no need to pay to bring the goods to a near place and sell it to the consumer near to them. They can reach many consumer globally and sell more than other business because they have many factory from other country and sell the goods in many country and the company name will be remember by everyone. They can minimize the wages of an employee by locating operations in a country with low wages and the owner of a business can save more for the profit. They can raise new capital for the business expansion, research and development to make the employee more skilled and employ more skilled worker and manager.
The conclusion of the point above it the German company can affect the Indonesian economics and Indonesian business. It can make it rise and fall. There are some advantage and disadvantage of MNC.
A multinational is a firm that has business operation more than one country but will usually have its headquarters based in its country of origin. There are many examples of Multinational companies or corporations, such as Shell, they sell Oil and Gas, their total revenue is pretty much than the other corporations or company. Now the question is that A large, capital-intensive German company producing electrical goods decided to establish a factory in Indonesia. And how the establishment of the factory will affect existing Indonesian companies and the Indonesian economy.
ReplyDeleteFor the first, Competition. If the Factory will be established on Indonesia, it might cause wmany competition between one company and a million companies. If one company established in Indonesia, it will be a new enemy for other companies. So that is the reason why there are a competition between one company and a million companies. And it might affect the Indonesian company also because the Indonesian companies might be bankrupt in the future.
Second, if the German company sell their goods or service at a low price, they can steal customers from the other companies. It might also affecting the Indonesian companies and Indonesian economy because it might cause people would like to buy foreign goods and they will not buy the products of their country.
Third, natural resources can be exploited and the environment damaged by some multinationals, so the laws and regulations to protect the natural environment may be weak or not enforced in some developing and less developed countries.
And the Advantages for Indonesia are, First, increasing of employments, many job who will be available. So if the German company established in Indonesia, it will reduce the amount of unemployment that exist in Indonesia. Because they need someone who will work in their company. And surely it will be a advantage for indonesian economy because unemployment that occured in Indonesia reduced, so no more people who become a beggars, etc.
Second, they will bring new knowledge and skills into Indonesia, so the German company can help domestic firms improve their own productivity, also for the workers who work in the German company, they might also improve their skills and knowledge, so if they work in other company, they already know what to do because they have better skills and knowledges.
Third, Taxes. This factors would also be an advantage for Indonesia because every new company that established in Indonesia have to pay taxes to the government and including taxes for the other factors.
For the conclusion, there are many advantages and disadvantage have been said above, and it is also good for German company to establish their company on Indonesia, because they might get more profit, And also it is good for Indonesia because people do not have to travel to foreign countries if the German company is established on Indonesia.
- Celia Pricilla Mesatania 8A -
First of all, MNC is a multinational corporation which means that the business is expanded to overseas or to other countries. Usually MNC companies are large and are already successful in the own country. This large company are intensive and they are ready to expand to other countries which would be very risky for them because of other competitive businesses. The large and German intensive company that produces electrical goods could affect existing Indonesian company or business that produces electrical goods by making their sales and profit decreases and the chance of loss is increased because as mentioned before, the MNC company are large and intensive and they are already very successful before in their own country so they have more capital and better technologies which could attract more customers. Smaller businesses could be forced to shut down because it couldn't compete with the larger company which have higher productivity and have higher capital which they produces higher quality goods. And because the MNC company are already successful and well-known, customers trusts the product's quality produced. Examples of MNCs that comes to Indonesia are Mc.Donald,Burger King, LV, Nike, and more. This large companies are from overseas countries which are already very well-known , so other existing business couldn't compete with this large country. For example, Eagle brand shoes couldn't compete with nike because nike is a larger business with higher quality and higher popularity which customers have the trustworthy of the goods of nike, while only few would buy eagle shoes because they have less satisfying quality of goods and it it only known most in only in Indonesia or own country. If the company is too large, they could monopolize the economy which is because they are a very large,intensive, and very strong business. If there are too many MNC companies, Indonesia's economy could decrease because the income of sales are more from MNC or other countries businesses that comes to indonesia. So if the German company comes to produce electrical goods, the electrical goods that are produced by exsisting indonesian company could have less sales and the economy of indonesia would decrease because Indonesia mainly or mostly uses products of MNC companies. And if the company is too strong, government would give higher tax to the company which could make the price of the product increase and economic of people in Indonesia could be decreased because they must pay higher selling price because the company are given higher tax. Government gave higher taxes so that the company couldn't be very strong because if it is too strong it could monopolize the economic of the country. By having a large, intensive MNC company like thr German company that produces electrical goods, there would be less unemployment for the other competitive exsisting company that produces the same goods which are a smaller business. Because the larger company have more capitals there would be more sales so, most customers are taken by the larger company so the smaller company would be forced to be shutdown because of less sales and having loss rsther than profit. As because the smallercompany too have workers, the workers eould be forced to be unemployed
ReplyDeleteBrian.A
8A
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ReplyDeleteMultinational company is a company that has its facilities and their assets in one or more countries other than its home country. They are big and powerful companies that may create impacts in their host countries such as a large and capital-intensive German company that produces electrical goods to establish a factory in Indonesia, it will effect the economy in Indonesia and the companies. Host country means a nation where individuals or organizations from other countries are visiting because of invitation or meeting.
ReplyDeleteThere are some impacts for the economy in Indonesia. The government gets more revenues from their profit due to the size of their company, which they will earn more profit compare to small companies. They bring new knowledge and skills like specialization to the country that helps domestic firms to improve productivity and have an increase in sales and profit.Then, unemployment will decrease because the company provides jobs and incomes for local workers which are very helpful for the country especially Indonesia as there is a high number of unemployment. They can increase export earnings through international trade, international trade means the exchange of goods and services along international borders, if there is no international trade, the country would be limited with goods and services produced by their own country.Lastly, they can have access in natural resources access, so the natural resources can be exploited and the environment is damaged such as land grabbing, desertification.Aside from that, German company can effect the extinction in Indonesia companies in many factors.The first on is wages inequality, multinational company usually pay higher wages compare to domestic companies so it will attract more workers to work there and there is a decrease in worker supply for the domestic companies, having a decrease, it can effect in the lower productivity of products by the lost of specialization from the company and less profit will be earned. Second, conflict of interest might happen because profit is the main objective and motivation force of multinational company. Their market rule makes it difficult for Indonesia companies to survive because they are squeezing the margins of domestic companies and as a result it can cause less diversity.
The points against it is that multinational companies need to have more in an expand of capital as they are capital-intensive and not labour-intensive, it might cause higher cost to buy the capital such as machine.They also compete with the companies in the host country and sometimes it is hard because they need to compete with large firms too, as a result, they may get less profit than expected and they will have to attract more customers to consume their product.Then, they will spend more cost on maintaining their assets than small domestic companies as they are grabbing more lands for their company to run.
In conclusion, German company can effect Indonesia companies in many reasons and factors, it can be benefit such as increase in economy and disadvantages like the extinction of the domestic companies.
Felicia Angeline
8A
A company from certain countries might want to establish their businesses to other countries. This is because they seek higher market share and to expand their business worldwide. Companies choose to invest in foreign markets for a number of reasons, often the same reasons for expanding their operations within their home country. The economist John Dunning has identified four primary reasons for corporate foreign investments.
ReplyDeleteMarket seeking. Firms may go overseas to find new buyers for their goods and services. The top executives or owners of a company may realize that their product is unique or superior to the competition in foreign markets and seek to take advantage of this opportunity. Another motivation for market-seeking occurs when producers have saturated sales in their home market, or when they believe investments overseas will bring higher returns than additional investments at home. This is often the case with high technology goods. As one analyst noted, “The minimum size of market needed to support technological development in certain industries is now larger than the largest national market” (Sutherland 1998).
Resource seeking. Put simply, a company may find it cheaper to produce its product in a foreign subsidiary- for the purpose of selling it either at home or in foreign markets. The foreign facility may be able to obtain superior or less costly access to the inputs of production (land, labor, capital, and natural resources) than at home.
In the modern world businesses are increasingly affected by the actions of international competitors as a result of the globalisation process. Globalisation occurs because of the shrinking of business distance so that it is much easier to access markets in far flung parts of the world. For example, a company like Cadburys or BIC has production units around the world giving access to global markets. Fast Internet connections developed by companies enable the shrinking of communication time bringing together buyers and sellers on opposite sides of the globe within seconds. In addition global marketing and advertising has enabled the development of global brands and the communication of global messages.
Multinational companies who establish company in Indonesia might make a great impact for Indonesia’s existing companies. They could be a potential rivals in the market share. The company might also take valuable natural resources from Indonesia and process it to make a product for their own company to sell. This will eventually cause Indonesia to run out of natural resources and the local companies in Indonesia will have insufficient resources to produce a product for their own company to sell.
The factory of multinational companies will create waste and might dispose it to local rivers in Indonesia, thus creating pollution in Indonesia and destroying Indonesia’s ecosystem and. The factory will also create gas pollution which will pollute the air. The premises and buildings of the multinational companies will also take space on Indonesia’s land, which will cause Indonesian government to have insufficient space to build neighborhoods and local company premises. This impacts might cause existing companies in Indonesia to work harder to win back market share from the multinational companies.
Jonathan Santoso
8A
Many companies established with the aim of looking for profit, increased market share, do the expansion. Therefore many companies are competing to become multinationals. A multinational company is firm that has business operation more than one country. The example of multinational company is: coca cola, Pepsi, Nike, Adidas, Puma, Diadora, Umbro, Yonex, Samsung, etc. The advantage of multinational company is can sell shares publicly, reduce transport costs, sell goods and service globally.
ReplyDeleteWe will discuss about the German company will open a new factory in Indonesia. For German company there are several advantages and disadvantages. The advantage is to reduce the cost gets especially transport costs, salary costs, lower material prices. When all costs to be cheaper than the profit the company would be much more. It is adjusted to general purpose company in general is to make profit. There are also disadvantages; the procedure to be followed is very difficult, because to make a factory in Indonesia, there are some terms and expenses to be incurred in order to ask for permission.
Indonesia's advantage if the German company opened a factory in Indonesia is the first, the Indonesian state tax revenues from the German company will grow. Tax will be used by Indonesia for Indonesia to build a better direction. German company must pay a tax to the state of Indonesia in accordance with applicable regulations.
The second advantage is German reduce unemployment in Indonesia. This is because the German company will employ the surrounding community. in this case the German company to assist Indonesia in combating unemployment, which in turn leads to economic growth.
In addition to the advantages there are also losses due to German company opened a factory in Indonesia, among others, the German company will be a contender for a local company. It can be dangerous Indonesian Government does not make rules to protect and prioritize local company. Therefore many issuing banks lending program to local employers.
Other disadvantage is polluting the emergence of new factories in Indonesia then more and more pollution in Indonesia. Sometimes companies do not care about the environment beyond the existing state their factories, because they think it's not their country. Therefore Indonesia must make strict rules for both local companies and companies abroad. One of the efforts is by making rules CSR to want to plant around the plant.
So, in conclusion German company, bring disadvantage and advantage to Indonesia country. German company will train their worker who Indonesia people to become skill worker, they will train Indonesia people in technology, system, marketing and strategic. This become useful for Indonesian people to make a new business like German company did with multinational company strategy and system. If one more people open their own business it means unemployment will reduce again in Indonesia. When unemployment is reducing, it means poverty in Indonesia will reduce or decrease and also the economic in Indonesia will grow. So, disadvantage can reduce if governments have a good regulation and strict control so that German company didn’t adverse Indonesia
WINSON 8A
A multinational companies (MNC) is a company that expand their business into another countries so they would earn more profit. If the German company are going to establish the industries in Indonesia, there will be some advantages and disadvantages. The advantages is that there will be job for some people in Indonesia and reduce unemployment here in Indonesia and it can make people to know the technology that is use in the industries and it can make Indonesia develop economically. The disadvantages are it can cause pollution to Indonesia because the company may throw the left over from the production into the sea and can cause the water pollution. If the company goes out successfully it may causing the other Indonesian company to loose the demand of their product, if we compare the technology in German is higher than in Indonesia and if the Indonesian company have bankrupt it may cause more unemployment for Indonesia. The advantages of establishing new German company is that it can help the people in Indonesia to get satisfied with their new technology of product and will give inspiration for the young in Indonesia to make Indonesia proud when they have grown. The disadvantages is it may cause unemployment if the company really successful and people are demanding it and the Indonesian company has loose demand it makes the wages of the worker to decrease and maybe they will find other job.
ReplyDeleteThe conclusion is it will maybe a good thing that a new company from German came to Indonesia and make their industries in here but some people maybe doesn't like it because German company may be tough to compete with because their country is very advances and their technology is very good.
Robin 8a
A multinational corporation (MNC) or multinational enterprise (MNE) is a corporation that is registered in more than one country or that has operations in more than one country. It is a large corporation which both produces and sells goods or services in various countries. It can also be referred to as an international corporation. ( Wikipedia.com ).Advantages of MNC’s for the host country are the investment level, employment level, and income level of the host country increases due to the operation of MNC's,the industries of host country get latest technology from foreign countries through MNC's,the host country's business also gets management expertise from MNC's,the domestic traders and market intermediaries of the host country gets increased business from the operation of MNC's, MNC's break protectionalism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness, domestic industries can make use of R and D outcomes of MNC's,the host country can reduce imports and increase exports due to goods produced by MNC's in the host country. This helps to improve balance of payment,level of industrial and economic development increases due to the growth of MNC's in the host country.But there are also disadvantages such as MNC's may transfer technology which has become outdated in the home country, as MNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries, MNC's may kill the domestic industry by monopolising the host country's market, and in order to make profit, MNC's may use natural resources of the home country indiscriminately and cause depletion of the resources. Last,large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty.So in conclusion there are both advantages and disadvantages it. It can give both benefit and disadvantages to Indonesia.
ReplyDeleteAudrey Tan 8A
Thanks for telling us such precious information about the multinational company
ReplyDeleteZein El Dine International is also a multinational company that provides the franchise opportunities in japan.