What Is A Multinational? “A multinational is a company with operations, subsidiaries or investments in two or more countries .”
Benefits To The Country Create wealth and jobs around the world. Their size enables them to Benefit from Economies of scale enabling lower costs and prices for consumers. Large Profits can be used for research & Development. For example, oil exploration is costly and risky which could only be taken out because they make high profits. Ensure minimum standards. The success of multinationals is often because consumers like to buy goods and services where they can rely on minimum standards. i.e. if you visit any country you know that the Starbucks coffee shop will give something you are fairly familiar with. It may not be the best coffee in the district, but, it won’t be the worst. People like the security of knowing what to expect.
Costs To The Country -Remittance of dividends and profits that can result in a net outflow of capital - MNCs engage in anticompetitive activities such as formation of cartels and dumping.. - MNCs offer higher wages to its employees in the host countries, which is much more than any other domestic firm. - Obsolete technology may be used in the host country.
Benefits To The Workforce The advantage of a big company is that there is more chance for advancement, usually greater opportunities, greater work choice, international opportunities with travel, overseas postings, and the money is probably very good to. A smaller business will have less opportunities, however they may provide greater job satisfaction, more diversity, even better rewards. I guess it will depend on what you want and where you want to be.
Costs To The Workforce “81 percent of multinational firms expect a decline in their business performance in 2009, and 35 percent are likely to make significant workforce reductions.” Multinationals are often subject to severe downturn which means the workforce isn’t stable.
Benefits To The Multinational Cheaper workforce in different countries. Raw materials may be more readily available and/or cheaper. They can grow both economically and geographically as a brand.
Cost To The Multinational In order to alley the fears of host countries they need to: -provide employment -train managers -provide products and services that raise the standard of living - increase productivity Taxes or tariffs imposed on imports from other countries Trade restrictions imposed at the government-level