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rkets, countries in particular, real progress has been made in increasing the resilience of economies to outside shocks Part Two: mock test ? 1. Gapfilling ? Multinational investment has a (1)____history. Establishment of a multinational corporation ( MNC ) was a way to generate ine from diversified sources, a way to (2) ____ return on investment and to benefit from cheaper labour abroad. ? The formation of the European Economic Community (EEC) in l958 (3) ______ the growth of MNCs. Today the large MNCs control from 50 to 200 subsidiaries. ? A favourable aspect about MNCs is that they create (4)____ in foreign countries. They also contribute to innovation or (5)______ of new products and technology. But when ? innovation levels off and local technology reaches a point of sufficiency, MNCs are sometimes considered to be no longer (8) _____. MNCs must learn to interrelate their subsidiaries with the parent Company, to decision making authority and to develop satisfactory methods of control and ? supervision. ? An MNC must deal with (9) _____ barriers, different legal and tax structures, foreign currency. Other problems include how to secure continued (10) _____to resources, how to in ( crease market share, and how to tackle 1ncreased criticism and interference by foreign government, etc. ? KEYS ? 1. Long ? 3. Spurred 4. Jobs ? 5. Creation 6. Useful ? 7. Successful 8. Delegate ? 9. Communication ? 10 access Tape scripts ? A multinational corporation (MNC) has industrial and mercial anizations in foreign countries. Manufacturing plants are established abroad, in conjunction with supporting marketing systems. ? Multinational investment has a long history. In the early years of this century, European panies realized that their own home markets were small. Just as the Americans went west in the 1800s39。 European panies like Nestle, Unilever, and Royal Dutch Shell went overseas for new markets and became MNCs well before World War II. ? United States panies, which have a large home market of over 218 million people, had other incentives to multinationalize. Establishment of an MNC was a way to generate ine from diversified sources, thereby spreading recession risks. It was a way to maximize return on investments, and it was a way to benefit from cheaper labour abroad. ? The formation of the European Economic Community (EEC) in 1958 spurred the growth of MNCs39。 especially the American ones. The EEC established import dutyfree associations of countries, thus creating vast markets. This meant that one Western European plant of a United States MNC could sell its products within the EEC to a market of 200 million people without running into customs duties between countries. United States multinational growth in European was soon followed by the establishment of United States bank branches. ? How multinational can a corporation get? Some panies, like Nestle of Switzerland, make over 90 percent of their sales on exports and manufactured goods abroad. Today the large MNCs control from 50 to 200 foreign subsidiaries with 30 to 90 percent of their sales on exports and foreignproduced goods. In 1973 some experts estimated an annual turnover of $ 600 billion for al] MNCs bined. These MNCs owned over 80,000 subsidiaries worldwide. At that time the annual growth rate of MNC sales was estimated at around l0 percent well above the average Gross National Product growth of many nations. ? A favourable aspect about MNCs is that they create jobs in foreign countries. ? They also contribute to innovation or creation of new products and technology. But tt,hen innovation levels off and local technology reaches a point of sufficiency, MNCs are sometimcs considered to be no longer useful. At this point MNCs run the risk of nationalization, which is the confiscation of a pany,s property (plant, equipment, etc.) by a foreign government with or without adequate pensation. ? Successful MNCs eventually must learn how to interrelate their subsidiaries with the parent Company, how to delegate decisionmaking authority, and how to develop satisfactory methods of control and supervision. ? Having entered the international arena, an MNC faces an awesome task. It must worry mot only about how to overe the munication barriers already mentioned cultural differences, distance, and environment, but also how to deal with the different legal and tax structures in the various countries. An MNC also has to cope with foreign currency so that it can protect its foreign assets. Some other problems an MNC has to consider are: how to secure continued access to resources。 how to deal with increased criticism and interference by foreign governments。 and how to deal with labour 1aws and anitrust legislation both at home and abroad. ? In recent years MNCs have e under heavy criticism. Domestically they have been accused of exporting jobs, meaning that jobs are lost at home because the MNCs set up plants in other countries, sometimes exporting the products back home for consumption. Less developed countries, on the other hand, charge that for years they have been underpaid for their natural resources may be regarded as a challenge to national sovereignty. In other words39。 this viewpoint sees the MNC as capable of circumventing or subverting national objectives and policies. This obviously reflects the majority voting power of developing countries in the United Nations. ? Widely publicized reports of payoffs to government officials by MNCs, and even interference in local politics, have brought heavy pressure on MNCs to exercise greater care, police their tactics, and redefine their strategy. For example, the case of Lockheed,