Question

Which type of firms are better for local communities? Branches of MNCs or locally owned firms? Give your explanations.

PLEASE HELP!

Answer 1

Locally owned firms are better off for local communities

Companies that operate across national borders so-called multinational corporations can bring many benefits to their host countries, such as job opportunities and the latest technological innovations. At the same time, multinationals use its considerable size to select the organization's most favorable conditions. They have the ability to push small businesses out of business because, on average, local companies do not benefit from the same economies of scale.

Multinational corporations (MNC) are companies which, in addition to their headquarters in the home country, have control over properties, facilities and subsidiaries overseas. In other words, they 're multinational players with to fit budgets. Because of their scale and scope, MNCs in each of their host nations have the ability to affect both the global economy and local trade conditions. Although businesses go transnational for a variety of reasons, all of them have a fundamental interest in maximizing their own value chain moving production to the location that gives the company the most favorable conditions.

The push to optimize the supply chain also means multinationals must collaborate with local suppliers for raw materials , parts and other supplies. Such contracts are a fantastic opportunity for local businesses to help improve sales and reputations, because the signing of a contract with a large MNC distinguishes the local company as an entity supplying big multinational chains. A multinational company may use home-grown distribution firms at the other end of the supply chain to get their products into the hands of local consumers. If the MNC produces for both domestic and export markets, then resident customers will benefit from a larger, more diverse product range

Research and development may be prohibitively costly in searching for market opportunities, uncovering new customer patterns and creating goods that add value to customers, and local companies do not have the capital to pursue research and development of any sort. There are many more resources available to multinational companies. Most would devote huge budgets to identifying and exploiting existing, potentially lucrative markets for the MNC.This is good news for the local businesses. MNCs often work with local governments to improve local area trading conditions to make it a little easier to do business in the host country. So, when an MNC comes to town, you might see investment in roads , railways, utilities and communications infrastructures. Investment increases the economic growth of the whole city, and as a result , local businesses benefit.