Presented by Inaya and Anmol

Multinational
corporation
A journey through the Global Economy
A multinational corporation is one that has
business offices and operation in two or more
countries in the world. These companies are
often managed from a central office
headquartered in the home country.
 Employees working for

The advantage of a 01. MNCs receive training

and skill development
thus improving the human
capital of the host nation

company being a
MNC are:
MNCs generate tax

02. revenue for the host

government, which can be
used to fund public
services and development
projects.

MNCs may invest in

03. infrastructure
development,

benefiting the
such as
roads, ports, and utilities,
entire
economy.
 01. 02.
Fluctuations in Negative actions by an
exchange rates can MNC can harm its

The
impact MNCs' global reputation.
profitability.

disadvantage
of MNC
03. 04.
Managing diverse
global teams can pose Local competitors in
communication host countries may
challenges. challenge MNCs.
 High tariffs or trade

01.
restrictions can hinder

The barriers to
market entry

entry MNC are:

02.
Saturated markets with
strong local competitors
can be hard to penetrate.

03.
Limited access to local
distribution networks can
be a barrier.
 How can MNC’s influence
consumer and producer surplus
MNCs entering a market can intensify competition among local
producers. This competition can lead to reduced profit margins
for domestic producers, potentially decreasing their producer
surplus.
MNCs often have the resources and scale to produce
goods and services more efficiently. This efficiency can
lead to lower prices for consumers. As a result, consumers
may enjoy a larger consumer surplus because they can buy
products at prices lower than what they are willing to pay.
 A PPC graph of tax
on sellers:
Multinational corporations (MNCs)
often find ways to lower their tax bills
in host countries. They may do this by
shifting profits to low-tax locations or
using tax incentives. As a result, the
government's revenue from taxes
imposed on these MNCs can decrease.
 A PPC graph of tax
on buyers:
MNCs can impact the taxes that
consumers pay indirectly. By
influencing product prices through their
market presence and pricing strategies,
they can affect the amount of value-
added tax (VAT) or sales tax that
consumers pay on the products they
purchase.
 A PPC graph of tax
on Price Floor:
MNCs, with their global reach and
efficiency, can introduce increased
competition in local markets. This
competition can lead to lower prices for
consumers, which might challenge
government-imposed price floors meant
to protect local producers. MNCs'
ability to offer products at more
competitive prices can sometimes
undermine the effectiveness of these
price floors.
 A PPC graph of
I
Deadweight loss :
Large MNCs with significant market power may engage in monopolistic
practices, such as price fixing or limiting competition. This reduces
consumer surplus and can create deadweight loss by restricting the
quantity of goods produced and consumed, often leading to higher prices.

MNCs operating in different countries may not fully internalize the

environmental externalities they create, such as pollution or resource
depletion. This can lead to deadweight loss by not accounting for the true
social cost of their activities

MNCs that hold patents or copyrights can restrict access to certain

technologies or content, potentially leading to deadweight loss when
consumers are unable to access or use these innovations freely.
Thank you
very much!