Grade 8B
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.
The main objective of a private company is to find as many profit as they can and they want to expand in size. Sometimes to do all this, companies must do some ways such as cut costs, making factories in other countries where the country has a low cost(low wages, cheap materials). Some examples are Indonesia, Thailand, etc. The plan of making a company in Indonesia will result in some advantages and disadvantages for the country and the company. For the company there will be some advantages like, reducing the cost so that when they open a factory in Indonesia they can pay lower wages, buy cheap material and it can make it easier to distribute products. Not only that companies can expand their market size, it means that if they make a factory in Indonesia they can sell their products to every country in South east Asia. But there are also some disadvantages like they must pay taxes in Indonesia and Germany, they must monitor the factory in Indonesia so they must send a skilled manager to monitor and evaluate the operation and production activity in Indonesia.
ReplyDeleteThere are also some advantages for Indonesia if the German company makes a factory in Indonesia. The first advantage is German companies can decrease unemployment in Indonesia. The German company will give jobs to the people around the factory to become a worker or office boy or any other job. So the German company is helping the government to decrease poverty in Indonesia. Because one of the indicator in measuring poverty is the amount of unemployed people, the lesser the unemployed people the better that at the end can improve Indonesia’s government. The second advantage is the German company will give jobs to Indonesian people and they will also train them. This training will make Indonesians smarter, gain new knowledge about how to produce goods and how German companies manage their companies. This knowledge will help them to build Indonesia’s government in the future, from these workers they can make their own business or they can work in local businesses using the system and strategy of German companies that makes Indonesian businesses even better.
The disadvantages are it causes pollution. Pollution can be in the form of air pollution, water pollution, soil pollution or noise pollution, these pollutions can disrupt the people near the factory or it can also make people sick. So government must make regulations about CSR(Company Social Responsibility) like planting trees or making parks. The second disadvantage is that The German company will become a threat and rivals of the local companies mainly the company that produces similar products. If this happens to local companies, the local companies can go bankrupt. A problem that could happen when a company is bankrupt is many people will become unemployed. When unemployment increases so the economic condition will be disturbed. So government must protect the rights of local companies so that they will not lose with multi-national companies.
So in conclusion there are advantages and disadvantages in building a company in Indonesia. All of them depends on how the government can control it, if the government can protect the right of local companies so the arrival of the German company wouldn't be a problem.
Multinational company are company that builds their factory in other country because it have less cost of production which is cheaper labour,land and materials and have business operation in more than in one country but will usually have their headquarters based in its counties origins good example ps multinational company is nike factory in Indonesia ,If the German company is build in Indonesia it would really effect the companies in Indonesia and the economic in Indonesia by some factors such as
ReplyDeleteFirstly is the company will increase national budget because if they produce goods in Indonesia they must pay high taxes to the government so Indonesia government will have higher earning and so can build Indonesia facilities.
Second is that it could decreased the unemployment in Indonesia because building a multinational company in Indonesia can open more jobs to the public so more people will have more jobs so this can cause a decrease in unemployment and Indonesia people having more welfare.
Third is that they could increase export earning through international trade so they could increase the export in Indonesia because they will export their product and sell it in their country so this can cause and increase in Indonesia export so Indonesia will have more earnings because of the international trade.
Fourth is that they can bring new knowledge and skill into a country which can help domestic firms improve their own productivity so multinational company will also bring knowledge to the country such as nike can make Indonesia firms know more of shoe production and so they can make better quality shoes.
But there are also disadvantage of multinational company such as
first multinational company can exploit the resources of the country they are in so because they purchased their material here they could exploit their national resources by buying to much and don't care about the environment.
Second is they also can make pollution because usually they will build many factories and every factories will have pollution and the multinational company wont care about the pollution so the country could have high pollution from the waste of factories.
Third is they could exploit workers with low wages so the multinational company build their company in other country and so in the other country they want the cheapest price on everything so they could exploit workers with very low wages.
Fourth is they could fail business opportunities in that country such as if people make a business opportunities in Indonesia which is making shoes they wont stand even a little chance agains nike because their brand is international so people think its a very high quality shoes so people wont buy Indonesia shoes.
So in my conclusion multinational company is important for a country growth because they help for the country to get more advanced, better welfare and bringing new knowledge to the firms in the country but they also have disadvantages such as they could create pollution, exploit the environment , exploit workers with low wages and fails buisness opportunities .
A business establishing their factory in one or more countries are called as a MMC (multinational company). A MMC produce their goods and service in another country and it’s a large and profitable company. When the German company was built in Indonesia, itll bring both advantages and disadvantages. there are many MMCs that we know and were using their goods and services. For example of MMC in Indonesia is McDonald, the company was from somewhere around US, and since years ago it spreads throughout the world and to Indonesia too. And each branch in each country made a lot of profits by selling their foods and drinks.
ReplyDeleteThere are some benefits for Indonesia or the other host countries, for example is by decreasing the number of unemployment, but since the company is a capital-intensive, so they don’t recruit many Indonesians so it doesn’t give us many affects so its not a much advantage. Second, Reputation for Indonesia. Once a presence of a multinational company in Indonesia can improve her reputation, and it may bring other big MMCs to open their business here and will make more money for indonesia. Third, Technology transfer. Most of the company in Europe used a high technology which are minimum at Jakarta. And if they bring a new tech, ppl in Indonesia will do their job with the new tech to make it easier and the host family can learn a lot their production methods and some techniques. And the MMC will trained the Indonesian workers to be skilled for using the technology enough and the firm can see the benefits of using the technology. fourth More taxes revenue, all companies or factories in Indonesia must pay taxes, to the government. And the money from taxes will be indirectly returned to the society, for example is a company paid tax to the government, and the money will be used for constructing new roads, bridges, public schools, public hospitals and etch. And fifth is increasing the country’s income. When the company in Indonesia import their goods to the south east asia region, Indonesia will ge more money and itll increase the country’s welfare. And the sixth is the welfare for society, an example is nike in Indonesia, they opened their factories here and also sold some of them and they import some of them too, Indonesia was known as the best for some sport shoe productors, and the Indonesian ppl can enjoy the nike sold in Indonesia and don’t need to travel far to buy a nike shoe.
There are also the disadvantages, first is their affect to the natural environment. Theyre a firm that aims for much profit yet they wont care for the environment around them. And they will throw their waste from the factories to the environment which can cause a lot of disadvantages to Indonesia when the environment Is destroyed, so the factories are told to be built around the rural area so it wont affect much for the citizens. Second, the access to the natural resources, most MMCs invest in some countries to get the natural resources for a cheap price, like the raw materials and man labor, and they’ll sell their products in a high price. Third, increase the competition, the competition become fiercer when a new comer join into the trade. Fourth is uncertainty, the MMC company can move out of Indonesia whenever they want and that cause an uncertainty to the host country. The fifth is health and safety, MMCs had been accused of cutting corners of health and safety in a country where the regulations are not strict.
There are advantages for the home country too, such as:
ReplyDelete1. The home country will get benefits from the foreign country brought by the MMCs.
2. MMCs help to maintain the home country’s balance of payment for a long run.
3. It gives a boost to the industrials activities in the home country.
4. MMCs create employments both In home and host country.
There are disadvantages for the home country too, such as:
1. Mncs transfer the capital from home country to a various country, causing an unfavorable balance of payment.
2. MNCs doenst create an employment for home countries if the company adopt geocentric approach.
3. Because of the investment in the foreign countries is way more profitable, it may neglect the home country’s industrials and economic growth.
So in conclusion, by investing an MCC in another country has both advantages and disadvantages to both side, but MNCs play an important role in the development of the country
An MNC or a Multi-National Company is a company that has another branch of the company at a different country than the original country of the company. These firms are usually quite large because they will need a large supply of funds in order to make a branch in a different country, and the only company that has enough funds like this is are large companies.
ReplyDeleteThe German Capital intensive company in question is trying to establish an electrical good factory in Indonesia. This will affect Indonesia’s smaller companies and the economy in a number of ways some are good some are just bad for Indonesia.
Decrease unemployment, as an MNC this company couldn’t possibly send workers from Germany to Indonesia, as doing so increase expenses of the company by making the company pay for travelling expenses for the hundreds of workers from Germany. The solution is to hire workers from Indonesia as a way to decrease expenses. More factories they make the more labor they would hire and the smaller the unemployment numbers that exist in Indonesia, which is very beneficial for Indonesia’s economy.
A much faster growth for other companies in Indonesia. This large German MNC would most likely try to find a partner for their Indonesian factory, this partner could be a supporting company, or even a supplier. The German MNC would help these other companies by being partners, either by investment or by borrowing them money to finance and grow their company. This help by the German MNC would increase their growth rate to a quite large degree. So it is very beneficial for those companies that the German MNC to actually establish their factories here in Indonesia.
These are the advantages of the German MNC deciding and actually establishing their factories in Indonesia. There are disadvantages for an MNC to establishing factories in Indonesia such as:
A monopoly of the market. Indonesia is an LEDC this means that there are much more small companies than large ones due to a more un-advance economy. A large MNC could potentially ruin all of the smaller companies that exist in the market. By monopolizing the market and making all of the small companies go bankrupt. This could be moderated somewhat by the government, as they have the power to make sure that the MNC don’t establish and grow too much in that market that they would monopolize the Indonesian market.
Underpaid workers. The German MNC establishing their factories here in Indonesia might reduce unemployment, but they might cause another problem which is underpaid workers. A large MNC will always try to find more ways to reduce their cost of production, indirectly this meant underpaying workers that are hired. This just like most of the disadvantages it could be moderated somewhat by the government because they have the power to set rules to moderate this problem, by having minimum wages for a worker hired by a large company or in this case the large German MNC higher.
In conclusion, this German MNC could make more benefits than liabilities if the government moderate the problems caused by it.
If the German company established a factory in Indonesia , it will make a big impact . That impact may be good or bad . most of the impact will be at the Idonesian economy and also the other business in Indonesia. The good impact will be more money to government , lower unemployment ,more high quality goods , etc . And the bad impact will be the distraction of environment , low wages , etc
ReplyDeleteSo if the German company have their business in indonesia , it will have a lot of impact . the good impact for the indonesian economy and business are : First ,If there is a big company that come to indonesian , then they must pay taxes to the Indonesian government. This taxes can be used for Indonesian government to renew their economy . From bad into good. The most problems in Indonesia of having a bad economy is because their money is not enough . Some of it actually have enough money , but the problem is many people do corruption , so it just be still the same . Second, if they have a business in Indonesia , then they will employ the people that are not working. Although their company are capital intensive ,but there will be still some workers needed to operate the business . Not only to operate but they also need to hire the un skilled people such as office boy. Without office boy they will not have a people to clean their factory , control their machine , etc . So this means , it can bring a profit for those people that don’t have any skills and education . Third , because their product will be also sell in here then it can bring some benefit to consumer . Usually , a product that is made by capital and have a high quality of workers will have a great output / product. Their product will not have a lot of error . their electrical goods will have a more quality then the other electrical goods. This can make people buy their product more and will not regret it . Because their product have a a great quality , it will last longer . If you buy the other goods that is made from Indonesia it self , it might not have a good quality rather than the german one . So for the consumer , they don’t need to keep buying the electrical goods and this can help the consumer’s income. Fourth , they also bring some new knowledge and skills to the workers they employ . The workers can know how to create the electrical equipment , how to control a machine , etc. This can make them more skilled and if it’s a new knowledge for Indonesia , he / she can share it and now all the people in inonesia country can know that that skills.
Not only a benefit , but that German company may bring some disadvantage or loss to the Indonesian income and local business. The disadvantage for Indonesian economy and other local business are First , Some multinational may exploit workers in low wages. The german company may pay the Indonesian workers with a very low wages . This can make indonesia have more poor people and Indonesian economy will of course fall. Second , natural resources can be exploited and the environment damaged by some multinationals. German company will of course need a land to operate their business. They will also need a very big land because their business are big . So the only way for them is only by cutting down the trees in the forest. This will make Indonesian natural resources being destroyed and by the time it may be gone. That German company also will produce a lot of dangerous gases that can make the people sick. So this may be dangerous. Third , Local competition may be forced out of business by that german company . If the German company produce more high quality goods and its more attractive then , more people will buy their product. Other local business that selling the same product will not have a consumer and some of them may be closed . Other business that before have a high sales can become lower because of this. This will be the main disadvantage for the local business. Fourth , Profit may be switched between countries so that multinationals avoid paying taxes .
ReplyDeleteSo the conclusion is that the German company may have a good effect and a bad effect because of this. Some people will suffered some of them will also get a benefit.
A private company main objective is to make as much profit as they can. To do this firm can expand their size by building their company outside and becoming an MNC( Multinational company ) the country with lower cost, so that they can pay less wages and buy cheaper materials from their original country. And by doing this , the company is able to maximize the profit that they are making. But there are some advantages and disadvantages of building a company outside their original country that is gain by the country and the company itself.
ReplyDeleteThe benefit for the company is that the company will be able to reduce the cost of production because when the company build a factory in Indonesia, the company is able to buy a cheaper material and pay less wages then their original country. The company can also increase their market size because Indonesia in one of the largest countries in the world. The disadvantages is that the company needs to pay taxes in Indonesia and in Germany. And a MNC is also hard to manage , so they need create a good managing system and they need to send a good manager so that the company can be able to monitor the factory well.
There are also advantages and disadvantages for the economy of Indonesia and its people. The first advantages for the people and the country is that the company can reduce the unemployment level in Indonesia and they can give income to those who are unemployed. Due to this the economy of Indonesia can be fix. The other advantages for Indonesia is that the people who are working for the company can gain more knowledge and experience. This knowledge can help them build their own company. When they build their own company , they will hire staffs too, so this help to decrease the level of unemployment in Indonesia and help fix Indonesia’s economy. The third advantages is that Indonesia may be able to get higher quality product from the German company rather than from the local company. Due to the higher quality of product , there can be less accidents that happen that is related to electricity.
The disadvantages is that the factory that the company build may increase the level of pollution in Jakarta. As it is a factory, they sometimes make a lot of pollution. These pollution that the factory create may disturb the people around it and the government need to give more effort to decrease the level of pollution in Indonesia due to the pollution created by the factory. The second is that the company will become a rival to companies that produce similar product to the German company. If the local company is not as good as the rival company , then they can go bankrupt. The company will be closed and the workers and staff will be unemployed. When unemployment increase , the economy of Indonesia may be disturbed.
So , there are advantages and disadvantages for the country and the company of allowing foreign company to be build in Indonesia. All of them depends on how the company manage the factory and how the government manage the country
Multinational companies might have factors that largely affect a country’s business market economy. Because they are already have large business scale so that they can expand their business to more than two countries. The countries that usually contain many MNCs are the ones that have less strict rules or policy, less cost of production, easy to obtain and maintain labour resources and less business taxes. Those countries include China, Indonesia, Taiwan and most of Asian countries. In this case, the MNC, the German company, expand their business in Indonesia because Indonesia has low cost of production and less MNCs strict policies.
ReplyDeleteThe German company may be beneficial to the existing Indonesian companies. Both of the german and the existing Indonesian companies may have agreement to be together or join to innovate or create better electrical products and better electrical goods business system or improve the business system development which will make Indonesian people more satisfied of their electrical goods and customer services, so that both MNC and existing one will have benefits and profits. That is the main factor that may affect the existing Indonesian companies. That german company may improve Indonesian business in Electrical goods market economy. First by increasing and improving the quality of their elcetrical products with the good services to customers. That ways will make many Indonesian people mostly buy electrical goods from that german company because those electrical goods are satisfying the Indonesian people. That also means that the german company will have greater sales and larger income or increase in profit. In the indirect ways, because the german company have bigger sales in Indonesia, that will make electrical goods sales in Indonesia become more famous and increase in market share value. Why? Because the world nations may see that Indonesia has very big electrical goods scale. Other factor besides increase in Electrical goods market share value in Indonesia, is the Indonesian government may charge little by little bigger tax to that German company because Indonesian government has see that the german company has been making a very great scale of sales in Indonesia.
But the german company may affect a bad and negative effect to the existing Indonesian companies in electrical goods market. Because they can be more intelligence in setting the more and most suitable price and developing the best product quality in the Indonesian market so that the Indonesian customers will mostly choose to buy electrical goods from the german company. That things will make the existing companies will go bankrupt or loses from the german company. Also with the labour recruitment, for the first or beginning time, the german company have very intelligent way to recruit more labour resources that has better skills in manage or activating the business. But later on if the business be more and more succesful, the labour will have rivals to apply to that company. For example like the labour that have two choices to either choose to apply at Google, Inc. or at Fake, Inc. Of cource that they will mostly apply to the one that is better, so they will mostly or 100% will aplply to Google, Inc. except their applications are refused, so they will be forced to apply to Fake, Inc. Same with the german company which has been much better than the existing Indonesian company, many labour will apply to that German company rather than others.
So depend on the situation. Government bestly accept the expansion of MNCs, but government should intervene and control those expansion by give more strict rules and policy or by giving higher taxes to the MNCs because government should also give their attention to the existing Indonesian companies.
{} That are all ideas popped out from my brain, thanks for reading {}
Please consider for the error for the typing, hehehe \*.*/
ReplyDeleteUsually company will want to get profit as much as they can so they can expand their size and compete with another company. A multinational corporation or multinational enterprise 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. Maybe the german company want to establish a factory in Indonesia because of several factor such as lower cost, many mand made resources and there are still many resources that the company can use to produce their goods. The advantages of a multinational company is Multinationals create jobs which boosts the local economy and more workers to tax, They bring expertise in that skills of workforce are improved, some may use IT that would never have before or other skills now deemed basic by the western or developing world, Multinational companies can benefit from economies of scale, Multinationals are in position to benefit from economies of scale. This means the cost per unit can be lowered through specialisation – with a large workforce work can be divided up and people can do their limited job expertly, Technical economies can be gained with automated equipment, but only when fixed costs of machine can be spread out over outputs, Purchasing economies can be achieved, for example by buying in bulk companies can obtain supplies and materials at a cheaper cost per unit. But becoming a multinational have disadvantages like multinational company may transfer technology which has become outdated in the home country, As multinational company do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries, multinational company may kill the domestic industry by monpolising the host country's market, In order to make profit, multinational company may use natural resources of the home country indiscriminately and cause depletion of the resources, A large sums of money flows to foreign countries in terms of payments towards profits. But multinatioanal company also bring advantages and disadvantages for the country that they used to build a factory. Advantages : multinational company create opportunities for marketing the products produced in the home country throughout the world, They create employment opportunities to the people of home country both at home and abroad, It gives a boost to the industrial activities of home country, multinational company help to maintain favourable balance of payment of the home country in the long run, Home country can also get the benefit of foreign culture brought by multinational company. So maybe the company in Indonesia can get more knowledge and the people in Indonesia will try and become more better than before because they must compete with big companies. But the people that doesn’t have enough education or the small companies can’t compete with the multinational companies their company will die because people will prefer to buy goods from the more popular one because it’s quality is already tested by many people so they will trust on the famous companies.
ReplyDeleteVincent CIA
8B
Multinational company 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. Some of the example of multinational company is Gillette, Mc Donald’s, Microsoft, etc. if there is a large company in Indonesia, of course it will bring several impacts, the impact can be good and also can be bad. Here is the advantages and the disadvantages.
ReplyDeleteIf there is a large company that established in the host countries, like examples the large capital intensive German company that producing electrical goods in Indonesia. It brings some advantages. First, if there is a large company in Indonesia means the large company is successful and have many knowledge, if they established it in Indonesia means they can result in sharing the technology and knowledge in Indonesia. Second, MNCs provide high quality and modern facilities and services to the consumers of host countries, it means that if they established in Indonesia, of course the consumer is Indonesian people and Indonesian people can feel the modern facilities and services of the MNCs. Third, if there is a large company means they will need a lot of workers, and since they established in Indonesia means they employ the workers from Indonesia, and also since in Indonesia there is many unemployment, so it will reduce the number of unemployment in Indonesia. Fourth, they bring advantages in investment, such as the companies bring much needed money into the country. Although most of their profits do return to the company’s country of origin, the local economy does benefit. Fifth, they also bring the advantages for transport, like the new companies often help to improve transport links around the area. Sixth, it also can make the environment safety, example companies bring with them the technology and expertise to reduce harmful pollution and create a safe working environment.
Not always that if there is MNCs in the host countries such as the German company in Indonesia only have advantages, it also bring disadvantages. First, the disadvantages for investment, the wages paid to local workers are often low and some companies have been accused of exploiting the local work force rather than benefiting it. There are often tax incentives for these companies to locate in countries in the Developing World. This added to the fact that they take most of their profits out of the country, means that the actual economic benefit to the country could be minimal. Second, disadvantages of technology, unless the company actively participates in a program to educate local companies in the new technologies, the country’s industry will not really benefit. Multi-national companies might be worried by sharing too much information, as they could find themselves with increased competition from local companies. Third, disadvantage of employment, often the jobs are highly skilled and so the company brings in their own people to do them. Also, the technological nature of many of these companies means that there aren’t as many jobs as there might have been, means that multinational company is a large company and of course the job is highly skilled job, so not every people can work there, they only employ people for example like cleaning service. Fourth, disadvantages for environment, well sometimes if they care for the environment and if their business is something to work with environment such as the WWF(world wild fund), but if they don’t care like, many multi-national companies have very poor records on pollution and worker safety. They have been accused of trying to cut corners with both safety and pollution in order to keep costs down.
ReplyDeleteSo in the conclusion, if there is a large company that established in the host country, they will bring some advantages and disadvantages such as example the advantages is they will reduce the number of unemployment in Indonesia but the disadvantages is they can make the environment become more pollution because of the waste from that company.
shelvina gabriela 8B
Multinational company 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. Some of the example of multinational company is Gillette, Mc Donald’s, Microsoft, etc. if there is a large company in Indonesia, of course it will bring several impacts, the impact can be good and also can be bad. Here is the advantages and the disadvantages.
ReplyDeleteIf there is a large company that established in the host countries, like examples the large capital intensive German company that producing electrical goods in Indonesia. It brings some advantages. First, if there is a large company in Indonesia means the large company is successful and have many knowledge, if they established it in Indonesia means they can result in sharing the technology and knowledge in Indonesia. Second, MNCs provide high quality and modern facilities and services to the consumers of host countries, it means that if they established in Indonesia, of course the consumer is Indonesian people and Indonesian people can feel the modern facilities and services of the MNCs. Third, if there is a large company means they will need a lot of workers, and since they established in Indonesia means they employ the workers from Indonesia, and also since in Indonesia there is many unemployment, so it will reduce the number of unemployment in Indonesia. Fourth, they bring advantages in investment, such as the companies bring much needed money into the country. Although most of their profits do return to the company’s country of origin, the local economy does benefit. Fifth, they also bring the advantages for transport, like the new companies often help to improve transport links around the area. Sixth, it also can make the environment safety, example companies bring with them the technology and expertise to reduce harmful pollution and create a safe working environment.
A MNC or a Multinational company is a company that has the manufacturing of it’s products in other countries, their production is in another country, especially LEDCs, because the hiring of labour and price of resources are cheaper there, which means that they had lowered the cost of production, increasing the possible amount of profit. If a German capital-intensive company would be established in Indonesia, it would affect both, bad and good to other companies and surroundings (Citizens, Government, Environment) in Indonesia.
ReplyDeleteFirstly, to the Indonesia itself, the establishment of a German company, which focuses in manufacturing electrical goods, would be good, why? Because the company would contribute to the development of Indonesia. There are many unemployed workers in Indonesia and the building of a big company would open chances for those unemployed workers to work, reducing the unemployment rate in Indonesia. Indonesia is a LEDC, it’s currently improving and the establishment of an international company can help Indonesia to develop, as German is known for it’s technology, helping the improvement of technology in Indonesia, so that Indonesia citizens would know about technology better and also help them in their work, improving workers productivity.
But on the other hand, the establishment of a large, German- company in Indonesia could effect badly to Indonesia, as a large company, of course they would need to produce a large amount of goods, which need a large amount of resources (Ex. Wood, metal) and if the usage of these resources are going to increase, the supply would slowly decrease, until it’s no more. Companies which produces electrical goods, especially capital-intensive ones would produce/secretes dangerous leftover chemicals/other materials, which would be dangerous for the people living near the company and also destroy the environment as companies tends to throw their waste in rivers near them or pollutes the air with smoke.
In order to conclude on what have been discuss above, the establishment of a capital-intensive German company in Indonesia can be affect both good and bad to Indonesia, it’s just depends on how the company acts.
Grace – 8B
Capital-intensive company is a business process or an industry that requires large amounts of money and other financial resources to produce a good or service. In this statement, they are going to build their factory in Indonesia. There are positive factor and negative factor for Indonesia especially for Indonesian company and Indonesian economics. Here, I want to discuss about the positive and negative effect of the factory’s build.
ReplyDeletePositive effect is important for Indonesia. There are some advantage for Indonesian company is they can study from the company that has been developed so they can study how to manage the company, study the technology and how they can get the strategy of their business. There are some advantage too for Indonesian economy, it is very important if we can get many advantage to our economics. If they build their factory here, many abroad investors will come to Indonesia, the result of the big investment, it will make will make high export or import of goods from Indonesia.
Positive impact with the influx of high technology in Indonesia, Indonesia's competitiveness increases with Indonesia does not need to import more from abroad because it could be in production in Indonesia thus saving foreign exchange resources of Indonesia. With Indonesia to conserve foreign exchange will increase Indonesia's economic turnaround.
Especially if Indonesia could export to foreign countries will increase Indonesia's foreign exchange resources. Thereby increasing the Indonesian economy to align Indonesia with modern industrial country or industry forward.
Employees can increase revenues with high technology progress will require increased human resources and more professional , so as to increase the income of the employee . Employees with high incomes also the result of its purchasing power increases, the economic cycle is also increased by the ability shopping also increased.
The multinational companies will not only provide financial resources and factories just to poor countries which act as hosts, but they also provide a "package" of resources needed for the overall development process, as well as experience and managerial skills, entrepreneurial skills, which in the end may be manifested and taught to domestic entrepreneurs.
Losses resulting impact of the entry of investors by using high technology is not able to absorb the labor force in large numbers every year, while labor is also increasing. With little labor could be absorbed a bit then economic impact on labor absorption surroundings low then very few people who feel the economic ability to increase and more that can’t earn revenue from the industry. Since at least the people who earn their livelihood from the industry, then a few others that people can spend their income for the economic turnaround.
Continuation...
DeleteAlso can’t be expected to assist in remedying the problem of employment in host countries, they even often negative influence on the level of the average wage, because they usually provide various welfare benefits and salaries are much higher than the salary of the average salary of the employees, whether it is derived from the local state or imported from other countries.
In addition to the negative impact of multinational corporations has great potential to damage the economy of the host by suppressing the emergence of the entrepreneurial spirit of local business, and using a level of mastery of their superior knowledge of technology, foreign relations network is extensive and well organized, skill and aggressiveness in the field advertising, as well as control over a variety of different types of services complement each other to push out local companies that are considered to be potentially quite disruptive or threatening in the competitive arena, and at the same time to prevent the emergence of new companies that have the potential to be their rivals. Multinational companies also often use their economic power to influence, bribe, and manipulate various government policies in host countries towards unfavorable to its development.
As the conclusion, we can get very much benefit if the company build their factory in Indonesia and it’s very hard to find the benefits but beside from that benefit they also can cause much disadvantage for us.
Richard Sanders - 8B
A Multinational company is any corporation that has its assets or facilities in more than 1 country.. Such companies have offices and/or factories in different countries and usually have a centralized head office where they co-ordinate global management. Very large multinationals have budgets that exceed those of many small countries. Sometimes referred to as a "transnational corporation". Nearly all-major multinationals are either American, Japanese or Western European, such as Nike, Coca-Cola, Wal-Mart, AOL, Toshiba, Honda and BMW. Advocates of multinationals say they create jobs and wealth and improve technology in countries that are in need of such development. On the other hand, critics say multinationals can have undue political influence over governments, can exploit developing nations as well as create job losses in their own home countries.
ReplyDeleteThere are positive and negative ways a multinational company could affect the economy of the host country.. Some examples of positive affects are of the following.
1. They could provide a job field to the local people in that host country
FDI will usually result in employment benefits for the host country, as most employees will be locally recruited. These benefits may be relatively greater given that governments will usually try to attract firms to areas where there is relatively high unemployment or a good labor supply.
2. The foreign investment could make the economy grow
The economy of the host country will grow because of the money flowing in due to the MNC. The money comes from the expenses the MNC makes in the host country. For example, they bought land, a factory, an office etc.
3. In most cases the MNCs will be a source of tax revenue
Since MNCs has a factory in the host country and is making profit in the particular country, they have to pay tax. Profits of multinationals will be subject to local taxes in most cases, which will provide a valuable source of revenue for the domestic government. Research also finds that democratic countries generate as much as 26% more tax revenues from multinational corporations relative to authoritarian countries
4. Increase of wider and more variety of goods and services for the people in the host country
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 available to the consumers of the host country with the establishment of multinational companies sales outlets and at a price possibly lower than imported substitutes. .
5. Improving 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
However it isn’t always a positive impact that the MNC brought to the host country. Some examples of negative impacts that occur due to MNCs are :
ReplyDelete1. Access to natural resources
Multinationals will sometimes invest in countries just to get access to a plentiful supply of raw materials and host nations are often more concerned about the short-term economic benefits than the long-term costs to their country in terms of the depletion of natural resources. The MNCs will produce waste to the host country’s land therefore if not managed properly it’ll pose a threat to the surrounding environment and people.
2. Transfer pricing
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.
3. Increase in inflation rate
Multinationals will increase the tendency of local people from host countries to buy their goods and services, meaning their demand could increase and they will increase the price of their products. This may cause inflation and inflation will result to reduction of investment and that means slower economic growth. High Inflation also makes it more costly to maintain your current standard of living. Prices increase, but income stays the same. During an economic recession inflation is especially bad because unemployment is usually higher and prices are increasing making it much harder for families to make ends meet.
Aside from the positive and negative impacts and MNC has to the economy of the host country, it also has an impact to the domestic firms such as :
1. Bring in more skills and advanced technology to host country
As a MNC they are more advanced and they got the latest technology from more developed companies so when they open a factory or a franchise in our country we could learn and also take that as an advantage so that we can buy / make the similar technology
2. Enhance competitiveness
Because there is MNCs the domestic firms will have to strive to be the best in the economy, hence they will put more effort into their work so that they can overcome and come on top of the MNCs.
There are also disadvantages that MNCs bring to the domestic firms in the host country, examples are:
1. Monopoly
MNCs may kill the domestic industry by monopolizing the host country’s market. If that happens that means that the MNCs could control the prices of the domestic firms.
2. Competition
Now that there is MNC in the host country, more people will have the tendency to buy those products rather than local products. So because of that the local firms could lose in the competition and it could result to the
MNC having more demand and producing more profit
However in conclusion, MNCs entering into new markets can have both positive and negative impacts on local economy, it all depends on how the government of the host country controls and manages the MNCs in the country.
Charlene 8B
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. The main objective of a business is to earn much profit. To do all of this , the company of a business must do some ways to keep earning profit . For example , cut their costs . If costs decreased , profit will increased. Now were talking about how a multinational company can effect the particular economy.Multinational corporations play an important role in the world economy through the process of economic globalization; in other words, the increasing economic interdependence of national economies across the world through a rapid increase in cross-border movement of goods, services, technology and capital.Multinational corporations have played a leading role in this globalization, establishing multiple links between the economies of various countries. Using capital from developed countries, MNCs establish factories and plants in developing countries, where they can access raw materials and labor more cheaply. The finished products are then shipped back to wealthy countries where there is a consumer market.These multiple links lead to an increasing economic integration between various economies, resulting in the emergence of a global marketplace or a single world market. Influence on Local and National Economies : National and local governments often compete with one another to attract MNC facilities, with the expectation of increased tax revenue, employment, and economic activity. To compete, political entities may offer MNCs incentives such as tax breaks, pledges of governmental assistance or subsidized infrastructure, or lax environmental or labor regulations.
ReplyDeleteBesides holding the promise of economic growth for local and national governments, multinational corporations also exert power over political entities once they are established, through their control over technical and intellectual property. For example, Adidas holds patents on shoe designs, Siemens A.G. holds many patents on equipment and infrastructure and Microsoft benefits from software patents. These patents often allow multinational corporations to exercise a monopoly in the local economy, preventing local enterprises from developing. This also functions to keep labor costs low, sometimes exploitatively so.
Because of their size, multinational corporations can also have a significant impact on government policy through the threat of market withdrawal.
So in conclusion , 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. The main objective of a business is to earn much profit. To do all of this , the company of a business must do some ways to keep earning profit . First is cutting their costs of product . Second , increase the production . Third , increase the market share to keep earning more profit.
Leonardo Steven – 8B
Sorry sir for the 3 days late of submission.