4.4.1 The impact of MNCs

Question 1

Advantages of being a multinational company

Answer 1

1. Inceased Market Share
2. May avoid tax or trade barriers
3. Reap economies of scale
4. Spreading risk being in different markets around the world

Question 2

Disadvantages of being a multinational company

Answer 2

1. Higher costs
2. May reach diseconomies of scale
3. Harder to maintain a good reputation
4. May lose focus in original markets

Question 3

Ways to control MNCs

Answer 3

1. Introduce trade barriers to discourage MNCs
2. Implement laws EG:Exploitation of workers
3. Increase tax rates

Question 4

Advantages to a country of attracting multinationals

Answer 4

1. Inward investment
2. Importing technology and expertise
3. Job creation
4. Improve balance of payments position

Question 5

Disadvantages to a country of attracting multinationals

Answer 5

1. Loss of national identity > loss of culture
2. Closure of small domestic businesses
3. Exploitation of workers
4. Worsen balance of payments if stock is imported
5. Exploitation of environment

Question 6

What is a Multi-national?

Answer 6

A firm that operate in multiple countries