Benefits And Costs That Have Occurred As A Result Of Asda Takeover

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Introduction Asda was formed by a group of farmers from Yorkshire in 1965. The firm was the third biggest supermarket in the UK before being acquired by Walmart, an American multinational, one of the largest retail chain and the biggest employer in the world. (https://en.wikipedia.org/wiki/Walmart, accessed 20 June 2015). The aim of this assignment is to identify and examine the benefits and costs that have occurred as a result of Asda takeover. However, firstly it will be necessary to define the term 'multinational corporation ' and identify the motives that may lead a company to seek international status. What is MNC and why companies choose to go international? A multinational corporation is usually a large corporation which…show more content…
Additionally, MNC might opt for international status to diversify, this help the business reduce exposure to possible economic and instability in a single country. Although, competing in international markets offers important potential benefits, going overseas also poses daunting challenge. One of the main problems many business often face abroad is cultural barrier, strategies that work at home might fail overseas, given wide social and cultural differences. Another potential problem is currency exchange and regulation issues. The companies might also have to pay high tariffs or taxes, which can put the corporation in disadvantage or the host government may insist on part ownership in the subsidiary. Equally, MNC can bring many advantages and disadvantage for the host country. (Resource book) Advantage and disadvantage of Multinational to the host country MNC’s may potentially bring a lot of benefits to the host nation, the company may invest in the host country and creating wealth and jobs. Multinational can raise the grown rate of the host country by bringing in new investment, new technologies or managerial competition, thereby induce their domestic rivals to become more innovative and competitive.Their size and scale of operation enables the company to benefit from economies of scale enabling lower average costs and prices for consumers. (Resource book) However, MNC’s investment may not always be beneficial. Their
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