CHAPTER 10 - The importance and Growth of Multinational Companies

Question 1

HOW HAVE MULTINATIONALS DEVELOPED?

Answer 1

• economies of scale
• marketing
• technical and financial superiority

Question 2

BENEFITS OF BECOMING A MULTINATIONAL

Answer 2

• larger costumer base
• lower cost ( that can exploit economies of scale )
• higher profile
• avoiding trade barriers
• lower taxes

Question 3

BENEFITS OF A MULTINATIONAL TO A COUNTRY / ECONOMY

Answer 3

• increase in income and employment
• increase in tax revenue
• increase in exports
• transfer of technology
• improvement in the quality of human capital
• enterprise development

Question 4

DRAWBACKS OF MULTINATIONALS TO A COUNTRY / ECONOMY

Answer 4

• environmental damage
• exploitation of less developed countries
• multinationals often pay low wages
• taxes paid to the host nation are often minimal
• repatriation of taxes
• lack of accountability