This PPT includes MULTINATIONAL CORPORATIONS #2 which covers Benefits to Host Country Benefits to Home Country Disadvantages to HOST country Disadvantages to Home country Criticism to MNC

1. Sundar B. N.
Assistant Professor

2. ROLE OF MULTINATIONAL CORPORATIONS
Multinational corporations play both positive and negative roles. As
a positive force, multinationals can be a dynamic force or instrument
for wider distribution of capital, technology and employment.
As a negative force, multinationals can be monsters beyond the
control of national governments and working against public interest.
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3. Benefits to Host Country
Foreign Capital
Advanced Technology
Employment Generation
Foreign Exchange
Managerial Revolution
Healthy Competition
Growth of Domestic Firms
Standard of Living
World Economy
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4. Benefits to Home Country
Multinationals offer the following advantages to the country of
their origin :
(i) The home country can obtain raw materials and labour at
comparatively lower cost.
(ii) It can export components and finished products and thereby
market is widened.
(iii) It can earn huge revenue by way of dividends, royalty,
licensing fees, etc.
(iv) It can increase domestic employment due to higher scale of
operations.
(v) It can acquire technical and managerial expertise of foreign
nations.
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5. Disadvantages to HOST country
1. Technology developed by the MNCs may not suit the needs of host country.
2. MNCs may not operate within national autonomy and sovereignty.
3. Monopolistic practices of MNCs may kill the domestic industry.
4. MNCs may adopt ethnocentric approach in staffing.
5. MNCs may use the natural resources of the host country indiscriminately
6. A large sum of money may flow from the domestic country in the form of
dividends and royalty
7. MNCs normally concentrate on consumer goods but not capital goods and
infrastructure in host country
8. MNCs may distort the economic structure of the host country
9. MNCs may interfere in the political activities of the host countries
10. MNCs normally provide the outdated technology to host country industry
11. Pollutes the environment of the host countries
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6. Disadvantages to Home country
1. Transfer capital to other countries and cause unfavorable BOP.
2. May not create employment opportunities to domestic people
by following geocentric approach or outsourcing business
operations in various countries like the USA software
companies outsourcing business operations in India
3. May neglect the industrial development of the home country
as the transnational companies follow the secular approach?
4. May cause erosion of the domestic culture.
5. May exploit the natural resources resulting in excessive
exploitation of natural resources.
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7. CRITICISM to MNC
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