Multinationals-Advantages

and Disadvantages
MNC
 is an organization which owns or controls production or service
facilities outside the country in which it is based.
 It has interests in at least 4 countries.
 It often sets up subsidiaries in developing countries -WHY?
 Advantages
MNCs enjoy
• Cheap raw material
• Low labour costs
• Lower taxes offered by the government
• Quality of local labour force is improving
• Employment law is less strict
• Trade unions are not very strong
 Benefits for the host country
Multinationals:
Balance of employment and payment
• Create jobs
• Increase the GNP of the country
• Increase the standard of living
• Benefit the balance of payment of the country if their products are sold abroad
Technology and expertise
• Introduce new technology, production processes, and management styles and techniques
• Cause local firms to improve their efficiency (technology transfer)
Social responsibility
• Are in better position to finance projects that protect the environment from their
activities
Disadvantages for the host country
The balance of employment
Cause unemployment
What is Trump’s opinion
1. create competition for domestic firms about global firms?
2. often shift production facilities from one country to another
The balance of payment
Increase the total quantity of imports
Technology and expertise
1. Managers and supervisors are often brought in from the multinationals’ home country
2. Little training is given (locals can be employees as low skilled workers)
Social responsibility
Marketing harmful products