w1.6.
Multinational corporations (MNCs)
 Define and give examples of MNCs. (AO1)
Any cooperation that operates in 2 or more countries is called multiple national
cooperation.
Nike
Adidas
Apple
Google
 Evaluate the impact of MNCs on the host countries (AO3)
Benefits to host country
Job opportunities-
As a MNC moves in, it provides extra
jobs for the country
Reducing production cost for some
products eg: as apple moved into china,
it reduced the cost of certain products
such as screens as they use it in their
supply chain
Transport of skills and equipment
As MNCs move in, they bring
technology and skills with them and
teach local workers how to use them
EG: apple setting up a supply chain in
china has lead to the rise of skilled
Chinese workers which now assemble a
variety of products
Provides good quality products at a
cheaper price
MNCs to the host country, cause they are local market, it can easily influence the
manufactured there: eg: Coca-Cola
building factories in china, they also
started selling cola in china at a cheaper increased unemployment rate and the
price than before when it was imported
-attract more MNCs to the host
Disadvantages to host country
The exploitation of laborers
- The multinational cooperation gives
all the facilities to locals to learn skills
and after that, the company attempts to
earn more profit from the local market
and in return the labourers don’t get any
additional rise in payment
Increase pollution-
The MNC uses local raw materials to
get more benefit and that leads to more
manufacturing. To obtain raw materials
natural resources are exploited. And
also air and land pollution is increasing.
Attempt to start monopolys
When MNCs get into a host country, it
typically has a advantage over local
cooperation, EG; apple having a
advantage over Chinese phones during
the 2010s, causing a risk of apple
turning into a monopoly in the phone
market
Potentially outcompetes local
buisnesses and starts a monopoly
Influence local economy
When MNCs are a major part of the
market in certain ways, such as
Samsung closing its factories causing
stocks of Samsung’s supplyers to fall
Change local culture(social factors)
 - More tax/revenenue
- Setsup suppky chains
- Provide demand for local supplu
chains(creating opportunities for
local buisnesses to grow)
Increased competition (also positive)
Repatriation- profit taken to home
country

Increase exports Get influence by foreign political or

(saving foreign currency) social pressure

Links to BMT and Concepts

BMT 1: Hofstede’s cultural dimensions (HL only)
How might cultural dimensions be of significance for multinational companies in their
operations?
BMT 2: Ansoff’s matrix
Examine market development as a growth strategy for an MNC of your choice.
Examine different growth strategies for an MNC of your choice.
Concept: Creativity
To what extent does the presence of MNCs foster creativity?

Businesses often have to evolve (change) their practices and/or products in order to survive.
For example, although Samsung is best known for its smartphones and consumer electronics,
the multinational conglomerate is also involved with weapons manufacturing, life insurance,
fishing, theme park management etc. Samsung originally started trading as a grocery store!
(Surprised?)

Task: To be presented in class and worth 10 marks

In pairs, trace the evolution of a multinational corporation of your choice. What role did
creativity; ethics; sustainability and change in external environment play in its growth?
Next Topic: 1.4 Stakeholders