MULTINATIONAL COMPANIES

Question 1

What is an MNC?

Answer 1

A multinational company is one that operates in two or more countries.

Question 2

What is globalization?

Answer 2

The processes of interaction and integration of people, companies and governments worldwide via increased communication and trade.

Question 3

Positive Impacts on Host Countries

Answer 3

• Support of Local Businesses because the MNC might rely on them to supply raw materials, semi-finished goods or finished goods. They might also rely on them for local services such as transportation.
• They also bring employment opportunities to the country with also higher wages which helps the local economy through revenue taxation and higher consumerism. It also improves the quality of life of the locals.
• Support local government through corporate taxes.
• Boosts efficiency of the local businesses because MNCs raise competition in markets.
• MNCs also offer a larger range of products to the locals and also higher quality products.

Question 4

Negative Imapcts on Host Countries

Answer 4

• Exploitation of local workforce, due to absence of strict labour and health safety rules.
• Pollution
• Local competing firms might be squeezed out of business + Loss of customers
• Profits might be sent back to the headoffice country so there will be no reinvestment in the host location.
• Depletion of natural resources
• Loss of cultural identity, cultural shift in how people live.