1.6 - Multinational Companies (MNCs) Flashcards
1
Q
what is a multinational company
A
a company that operates in more than one country, with headquaters located in host country and operations in other countries
2
Q
why would a business want to outsource production to another country?
A
- access to new customers
- lower costs of production
- avoiding import restrictions
- secure supply chain
- diversifying risk
3
Q
what is a host country
A
the country that a business is moving into
4
Q
what positive impacts may a business have on its host country
A
- creates more jobs in the host country
- competition may motivate other companies
- company may purchase raw materials locally - contributing to the economy
- pay taxes to host country
- increases consumer choice
- likely to provide training to local employees - increasing human capital in host country
5
Q
what negative impacts may a business have on its host country
A
- damage of local businesses (bankruptcy?)
- depletion of non-renewable resources
- negative effects on environment
- erosion of local culture
- short term investments (difficult to meaningfully integrate and have a positive impact)
6
Q
what factors determine if the impact of multinational companies is positive of negative
A
- the level of respect that the company has for local culture
- whether they pay taxes to the country
- employ local employees or bring foreign labour
- labor conditions of the company
- impact on local businesses
7
Q
include relationship between MNC and governments?
A
8
Q
include outsourcing - etc.?
A
