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Samacheer Kalvi 11th Commerce Solutions Chapter 8 Multi-National Corporations (MNCs)
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Samacheer Kalvi 11th Commerce Multi-National Corporations (MNCs) Textbook Exercise Questions and Answers
I. Choose the Correct Answer
Question 1.
A Multinational Corporation can be defined as a firm which ……………..
(a) Is beyond the control of any government
(b) Is one of the top 200 firms in the world
(c) Owns companies in more than one country
(d) All the above
Answer:
(c) Owns companies in more than one country
Question 2.
Centralised control in MNC’s implies control exercised by ……………..
(a) Branches
(b) Subsidiaries
(c) Headquarters
(d) Parliament
Answer:
(c) Headquarters
Question 3.
Enterprises operating in several countries but managed from one country is termed as ……………..
(a) Government company
(b) Multinational Company
(c) Private company
(d) Joint Venture
Answer:
(b) Multinational Company
Question 4.
Dispersal of decision making power to branches/affiliates/subsidiaries by head office represents ……………..
(a) Centralisation
(b) Decentralisation
(c) Power
(d) Integration
Answer:
(b) Decentralisation
Question 5.
Coca – Cola company is an example of ……………..
(a) MNC
(b) Government company
(c) Joint Venture
(d) Public company
Answer:
II. Very Short Answer Questions
Question 1.
Define Multinational Company.
Answer:
“A multinational corporation owns and manages business in two or more countries.” – Neil H. Jacoby
Question 2.
Write any two advantages of MNC.
Answer:
1. Low Cost Labour : MNC set up their facilities in low cost countries and produce goods/ services at lower cost.
2. Quality Products : The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.
Question 3.
Give two examples of MNC.
Answer:
- Coca – Cola Corporation
- Unilever
Question 4.
Name the type of business enterprise which operates in more than one country.
Answer:
A multinational corporation is known by various names such as: global enterprise, international enterprise, world enterprise, transnational corporation etc.
III. Short Answer Questions
Question 1.
What are the advantages of MNC’s?
Answer:
1. Low Cost Labour:
MNC set up their facilities in low cost countries and produce goods/ service at lower cost. It gains cost advantage and sells its products and services of good quality at low cost.
2. Quality Products:
The resource, experience and expertise of MNCs in the sphere of research and development enables the host country to establish its research and development system which helps it in producing quality goods and services at least possible cost.
3. Proper Use of Idle Resources:
Because of their advanced technical knowledge, MNCs are in a position to properly utilise idle physical and human resources of the host country. This results in an increase in the National Income of the host country.
4. Improvement in Balance of Payment Position:
MNCs help the host countries to increase their exports. As such, they help the host country to improve upon its Balance of Payment position.
5. Technical Development:
MNCs carry the advantages of technical development to host countries. In fact, MNCs are a vehicle for transference of technical development from one country to another. Because of MNCs poor host countries also begin to develop technically.
Question 2.
What are the disadvantages of MNC’s?
Answer:
1. Danger for Domestic Industries : MNCs, because of their vast economic power, pose a danger to domestic industries; which are still in the process of development. Domestic industries cannot face challenges posed by MNCs.
2. Transfer of Outdated Technology : Where MNCs transfer outdated technology to host nation, it serves no purpose.
3. No Benefit to Poor People : MNCs produce only those things, which are used by the rich. Therefore, poor people of host countries do not get, generally, any benefit, out of MNCs.
4. Danger to Independence : Initially MNCs help the Government of the host country, in a number of ways and then gradually start interfering in the political affairs of the host country.
5. Deprivation of Job Opportunity of Local People: MNCs may not generate job opportunities to the people of home country.
Case Study
Public enterprises are established to achieve the goal of economic and social development of the country. They are managed and controlled by Central or State Governments through ministers or government officials. Many times their poor performance i influences the policy formulation and running of the enterprise into loss. Even the big business houses use their influence and get the policies formulated in their favour. State the role of ministers or government to frame the policies for the success of public enterprises.
Answer:
Role of Ministers or governments to frame the policies for the success of public enterprises.
- The ministers or governments encourage to start multinational companies.
- It is easy to form in our country.
- The economic policy is favorable to the multi – nation corporations.
- The national income will increase by starting MNCs in India.
- At low cost the products to be produced and sold to people with minimum range of profits.
- Tax relaxation can be permitted because the Government allowed to start business.
- Tax revenue can be increased to the Government.
- New technologies can be imported from developed countries.
- Culture can be improved among the people.
- Communication may be developed.
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