1.6

Question 1

define multinational company (MNC)

Answer 1

any business organization that has operations overseas, irrespective of whether it produces/sells goods and/or provides services

MNC operates in two or mre country

Question 2

what is foreign direct investment (FDI)

Answer 2

cross-border investment

foreign company establishes an ongoing and significant stake (financial interest and degree of influence) in its operations in another economy

Question 3

positive impact of MNC on host company

Answer 3

Employment opportunities-improve life quality of citizens
Support for the workforce-better wages offer and training opportunities

Support for local businesses-purchase stocks from domestic suppliers of raw materials (provide revenue for local firms)

Choice and quality-offer variety of choices for domestic consumers

Tax revenues-multinational companies as they pay corporate taxes (build better infrastructure)

Question 4

negative impact of MNC on host country

Answer 4

Negative impacts on local businesses-lose customers to MNC, fall in market share, lead to bankruptcy, lose job opportunity

The repatriation of profits- profits send back to home country rather than the funds invested in host country

Exploitative business practices-workers being exploited (poor pay and bad working condition), damage to the environment

Loss of cultural identity-depletion of local cultures exp: young generation tends to follow trendy clothes sold by MNC clothing brand