Multinational companies Details

Question 1

Reasons for the growth of MNCs(i.e. why they choose to expand)

Answer 1

-Larger customer base
-Brand recognition
-Technology(progress in technology can facilitate the growth of MNCs)
-Tax incentives(offered by host countries, since MNCs can bring advantages to them)
-Avoiding trade barriers(e.g. tarrifs)
-Costs of production
-Lack of regulation
-Spreading risks

Question 2

Positive impacts of MNCs on host countries

Answer 2

-Creation of jobs
-Tax income for the government
-Boosts local economy(i.e. more products/better quality available for consumers)
-Skill/technology transfer
-Potential improvement of infrastructure
-Business for local suppliers

Question 3

Negative impacts of MNCs on host countries

Answer 3

-Exploitation of labour(e.g. poor working conditions)
-More demanding jobs may be held by expatriates who later leave the country(Brain Drain)
-Pollution
-Depletion
-Unfair competition(for local businesses) may lead to over-reliance