Midterm Question # 1

MNC's are complex organizations however, they dominate the worldwide market. Knowing the background and nature of MNC's, answer the following:

1. Identify the benefits and disadvantages of MNC's.

The multinational companies provide employment, infrastructure development and growth economies,Gaining a strong foothold into the international market, Low-cost locations, Cheaper labor costs, Cheaper raw materials and distribution costs, Taking advantage of the many tax breaks offered by foreign countries, Access to new technologies and methods.

There are various disadvantages of multinational companies. Firstly, multinational companies can severely impact the local industries because it increases the competition in the economy. Secondly, multinational companies can negatively impact the culture of the economy. Thirdly, because of the trade restrictions the multinational companies can face various problems. The availability of resources are limited in an economy and when multinational companies are opened then resources can get scarce. Moreover, though a company can grow because of investments brought by multinational companies but still the economies can grow more if the local investors make these investments.Trade restrictions imposed at the government-level

Taxes or tariffs imposed on imports from other countries.Effective management of a globally dispersed organization
2. Identify one MNC company and describe its operation.

HSBC has an enormous operational base in Asia and significant lending, investment, and insurance activities around the world. The company has a global reach and financial fundamentals matched by few other banking or financial multinationals.HSBC is by far the largest bank both in the United Kingdom and in Hong Kong. HSBC has been the largest banking group in the world.The HSBC Group has a significant presence in each of the world's major financial markets, with the Americas, Asia Pacific and Europe each representing around one third of the business. With 9,500 offices in 86 countries, 210,000 shareholders, 330,000 staff and 128 million customers worldwide, HSBC arguably has the most international presence among the world's multinational banking giants.The HSBC Group operates as a number of local banks around the world.

3. Describe how the parent control/coordinates with its subsidiaries in other countries or region?

The parent coordinate by knowledge flow or transfers in transnational corporations, identifying different form of knowledge to be transferred. As multinationals establish subsidiaries in new locations, they will transfer know-how from the parent to the local operation. In established multinationals with a geocentric orientation, knowledge should be freely flowing from one unit to another as the whole organizationsbenefits from development activity.

4. How is IT maximized or used by this MNC?

To promote pruductivity and enhancement, IT traits as investment, Traditionally Information Technology (IT) has been perceived as being a means to provide more efficient processes that would lead to lower cost products and services.Information technology continues to progressively penetrate into core business technologies. IT provides management with access to information and a means to make routine decisions without managerial intervention. Access to information implies that the various types of innovation described have occurred to some extent, dentifying the target market developing a unique base of information about this target market and establishing specialist processes to produce a cost advantage in servicing this market.

5. What were the weaknesses/problems encountered by this MNC from its environment and global setup?
The common problem encountered by multinational company is the economic crisis,culture of different subsidiaries,the different location,capitalization,expenses,communication,and management.

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Christine Linan