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What are the advantages and disadvantages of multinational businesses?
Multinational Business The advantages of a multinational business to host countries are:
Advantages to home countries
- Transfer of technology,capital and entrepreneurship.
- They increase the investment level and thus the income and employment in the host country.
- Greater availabilty of products for local consumers.
- Greater access to high quality managerial talentwhich tens to be scarce in host countries.
- Increase in exports and decrease in imports,thereby improving the balance of payment of host countries.
- Help in equalizing of cost of factors of production around the world.
- They provide an efficient means of integrating economics.
Advantages to home countries
- Acquisition of raw material from abroad,which is cheaper in cost.
- Technology and management expertise accquired from competing in global markets.
- Export of components and finished goods for assembly or distribution in foreign markets.
- Inflow of income from overseas profits,royalities and management contracts.
- Jobs and career opportunities at home and abroad in connection with overseas opportunities.
- Trade restrictions imposed at the government-level
- Taxes or tariffs imposed on imports from other countries
- Limited quantities (quotas) of imports
- Effective management of a globally dispersed organization
- Slow down in the growth of employment in home countries.
- Destroy competition and acquire monopoly.
- Technology designed for mnc's is for world wide profit maximization not for the social welfare or development of economy.
- They could cause fast depletion of some of the non renewable natural resources in the host country.
- 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
- introduce and develop new technical and managerial skills
- increase productivity
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disadvantages of networking
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