1.6

Question 1

Multinational Corporations (MNC’s)

Answer 1

An MNC is an organisation that operates in two or more countries, usually with its head office based in the home country. The terms MNC has its head office based in the home country . Transnational companies have many regional head offices.

Question 2

Benefits of globalisating becoming MNCs

Answer 2

• increased customer demand and base
• overseas cheaper production costs (inexpensive labour)
• increased production levels causing EOS.
• Brand development and value
• avoid regulations
• spread risks

Question 3

Impact of MNC’s on host countries

Answer 3

Pros
- Job creation
- higher national income
- knowledge and tech transfer

Cons
- Job losses, MNCs can pose a threat to local businesses who cannot compete.
- repatriation of profits back to home country
- Vulnerability
- Social reponsibilities
- competitive pressures

Question 4

Protectionist policies

Answer 4

measures imposed by a country to reduce the competitiveness of imports such as tariffs quotas and restrictive trade practices.