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What are the advantages and disadvantages of multinational companies?


Posted: by: unknown | 1 | Tags: economics companies

1 Answer

Advantages:training of local labor with more sophisticated techniques which, in the long run, will bring external benefits to the host country when these techniques can be used in all economic sector.raise the growth rate of the host nation by introducing new investment and new technology.induce their local rivals to become more innovative and competitive.promote improvement or development to various supporting industry or complementary industries contributions of taxation, plus providing the host country with foreign exchange that can be used to purchase vital imports.Disadvantages:Multinational companies may enjoy high competitive advantages over local firms that can destroy local competition rather than promote it.they can require their subsidiaries to operate polices that may be inefficient, or create distortion in the local market they may misuse the environment they may create uncertainty; foreign firms control the country within it by controlling part of its industries.they may not promote any development for the nation's economic activities by simply sourcing their components from abroad. The result of this is that they could drive local producers out of business.avoid tax by practicing transfer pricing.
by: unknown