Unit 1 - 1.6 Multinational Companies

Question 1

Multinational companies (MNCs)

Answer 1

Those businesses which operate in two or more countries

Question 2

Reasons why businesses become MNCs (name 4)

Answer 2

• Increased customer base
• Cheaper production costs (especially inexpensive labour)
• Economies of scale
• Brand development and brand value
• Avoid protectionist policies
• Spread risks

Question 3

Host countries

Answer 3

Any nation that allows a multinational company to set up in its country
* the impact can frequently be harmful

Question 4

Positive impacts of MNCs on host countries (4)

Answer 4

• Job creation
• Higher national income
• Knowledge and technology transfer
• Increased competition to incentivise local firms to be more efficient

Question 5

Negative impacts of MNCs on host countries (5)

Answer 5

• Job losses / cheap labour
• Repatriation of profits (money leakage)
• Vulnerability
• Social responsibilities (environmental harm)
• Competitive pressures