5) The impact of multinational corporations

Question 1

What is an MNC

Answer 1

MNC= a business that has operations in more than one country

Question 2

Characteristics of an MNC

Answer 2

• Diverse- produce various types of goods and services
• Worldwide- ownership remains in at the parent company, best technology established in parent country and transferred for use in other countries
• Marketing superioity- good networks so vast economies of scale
• High efficiency-use advanced technology

Question 3

Benefits of MNCs

Answer 3

• MNC enable economies to increases exports and decrease imports which benefits balance of payments CA deficits, as well as improving AD
• Transfer technology to developing economies improving growth and development and decreasing costs
• ALso increase investment and thereby income and employment

Question 4

Why MNCs can be harmful

Answer 4

• Cheap labour easily exploited by MNCs outsourcing
• Host nation may experience loss of control over its economy due to reliance on MNCS to provide new jobs
• loss of culture if MNCS takeover advertisement etc.