Multinational Corporations

Question 1

multinational corporations

Answer 1

A multinational corporation is a business that, although operated from one country, has facilities and assets in more than one country

Question 2

Reasons for the existence of MNCs

Answer 2

To benefit from economies of scale​

Achieve a corporate objective of growth​

Be a dominant business​

Global brand recognition​

To avoid protectionist measures in other countries or trading blocs​

Reduce transport costs ​

Reduce lead times​

Benefit from cheaper labour costs in other countries​

Tax differences between countries​

Produce close to materials or market​

Spread risk​

Question 3

Impact of MNC’s on countries in which they operate

Benefits

Answer 3

Creation of localised jobs – boost local economy ​

Provide support services for local businesses (cleaning, building etc.)​

Improved Infrastructure (roads, comms, utilities, healthcare, education) ​

Increased funds for local government to invest in education and healthcare services ​

Question 4

Impact of MNC’s on countries in which they operate ( Drawbacks )

Answer 4

Creation of wage inflation for local businesses​

Exploitation of cheaper labour may occur ​

Local businesses may close down due to MNC ​

Damage to local environment as a result of building road networks and factories ​

Question 5

Impact of MNC’s on National Economy

Answer 5

Foreign Direct Investment flowing into the country ​

Lower prices for Consumers​

Ability to transfer skills and technology across countries​

Reduces reliance on domestic goods and services ​