TNCs bring in capital for the development of these countries. Advantages of Multinational Corporations The Multinational Companies are best in carrying out their operations in more than one country at a time and this is the reason as to why they are called Multinational Corporations (Mathews, John, 15). Drain of Resources for Profit Maximisation: The basic objective of a MNC is profit maximisation through” exploitation of host country’s resources. The possible benefits of a multinational investing in a country may include: Improving the balance of payments - inward investment will usually help a country's balance of payments situation. Enjoys economies of scale. Advantages. This reduces benefits for the domestic workers. (9) Work for Self Interest: Multinational company work toward their own self interest rather than working for the economic development of host country. Disadvantages. The multinational corporations The multinational corporation is a worldwide corporation that has many operations in more than one country other than its home one, where it’s headquartered or managed. Critics have pointed out several drawbacks of multination corporations, such as: 1. Circumvets barriers to trade. Multinational Corporation Disadvantages 1391 Words | 6 Pages. They are more interested in marketing of profits at any cost. The transfer of technology and capacity building of the human resource in the host country can, due to the above mentioned factors, remain un-realised. Social cost and environmental degradation. The potential drawbacks of MNCs on host countries include: These companies have imposed the culture of fast food and soft drinks onto the developing nations. The Multinational Corporations income for their home country in another country. They just invest the money in a sector and provide some jobs, they could not be able to remove the unemployment to the country. Find free essays online and other academic research papers like the one above on the disadvantages of foreign direct investment to host country on this blog. Disadvantages of Multinational Corporation. The Main Advantages and Disadvantages of Transnational Corporations (TNCs) Operations for the Host Country and the Investing Country: Advantages to Host Country: Foreign Capital: Developing countries suffer from shortage of capital required for rapid industrialization. Every company in the Fortune Global 500 Top 10 earned more than $240 billion in revenues during 2017. One negative impact of an multinational corporation on a host country may be that local firms will be forced out of business because they can't compete. For examples:- burger and coke. Gets access to cheap labour. This foreign direct investment (FDI) will have advantages and disadvantages for the host country. Sometimes the Multinational Corporations disregard of national goals. It is least concerned with developmental areas, growth and equity of the poor host country. MNCs extend consumer and business choice in the host country; Profitable MNCs are a source of significant tax revenues for the host economy (for example on profits earned as well as payroll and sales-related taxes) Potential Drawbacks of MNCs on Host Countries. To the host countries, the Multinational Corporations produce a number of products, which provides the best possible […] Further, expenses incurred by the MNCs like high fees, royalty and other charges might put a drain on the foreign exchange reserves of the host country. Exploitation of labour. Improves the Balance of Payment for the host country. Improves the GDP and standards of living in the host country. The advantages and disadvantages of multinational corporations are essential to review because of the monetary power these companies wield. Transition Economies The evolving economies of developing countries are attractive to multinational corporations because of their low labor costs, abundant resources and large customer bases. Many multinational corporations have also been accused of being exploitative towards local laborers.
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