1.6 MNCs

Question 1

multinationals

Answer 1

companies which have operations located in more than one country

Question 2

reasons for growth

Answer 2

• larger customer base (new markets)
• brand recognition
• technology (increases affordability, improving communications)
• tax incentives (offered by country to attract MNCs)
• avoiding trade barriers
• costs of production
• lack of regulation
• spreading risks

Question 3

positive impacts of MNCs in host countries

Answer 3

• employment opportunities: better wages, trained workers, benefits economy
• local businesses may become direct suppliers of inputs
• MNCs build own infrastructure, benefitting community
• improves consumers’ product choices

Question 4

negative impacts of MNCs in host countries

Answer 4

• employment isn’t always safe, permanent formative and well paid (workers exploited, best jobs held by expatriates)
• may not uphold standards in terms of pollution control and protection of the environment
• demands of MNCs for local goods and services may increase products, harming local businesses
• might influence demand in host countries by encouraging shift to international products, thus, harming local businesses and threatening culture and values of host countries
• strong competitors: make take away business from local businesses