Business Studies Unit 4 Topic 6

Topic 6: Multinational corporations (MNCs) - companies that operate in more than one country

Advantages of MNCs to hosts:

1. Employment opportunities - providing jobs to locals 
2. Transfer of technologies - entry of MNCs to new countries bring new technology; provides new ways of production for local businesses to learn and train to gain appropriate skills
3. Tax revenues - MNCs provide tax revenues to host countries which helps them boost their infrastructure 
4. Economic growth - MNCs promote FDI into host countries; leads to increased incomes which leads to overall growth of the economy 
5. International relations - MNCs make countries cooperate with each other for mutual benefits; reduces conflict around the world 

Disadvantages of MNCs:

1. Environmental damage - MNCs destroy environment as some governments are to weak to control them 
2. Exploitation of local workers - MNCs use local workers and pay them wages but making them work in poor conditions; sometimes even using child labour
3. Tax Evasion - some MNCs avoid or pay less taxes by cheating the government
4. Repatriation of Profits - MNCs mostly give all revenue to their home countries refusing to share with host countries which directly affect their development 
5. Exploitation of natural resources - MNCs put a lot of pressure on countries natural resources for future generations 

Can MNCs be controlled?

1. Power of Multinationals - they combine high market shares with high net worth and use this power to pressure government to change laws in their favour despite the negative effects
2. Legal constraints - more often control is weak…