A multinational
company is a one which produces goods and services outside its home country. It
is called Multinational as it has its own production, sales and other revenue
generating assets in a number of countries.
Advantages of
forming Multinationals
v It reduces transport costs
v It helps to avoid import restrictions
v It helps to enjoy government’s regional assistance
v It helps to enjoy lower-wage labours
v It helps to enjoy cheap raw materials
v It gives advantage of health and safety regulations
v It helps to avoid certain taxes
Advantages of
hosting Multinationals
v It increases employment opportunities in the host
country
v It brings an enormous increase in economic output
of the host country
v It brings in new technology and new approaches to
management
v It increases consumer choice
v Increased competition brings better quality goods
at lower prices
v It increases foreign currency inflow due to its
investment
Disadvantages of
hosting Multinationals
v It leads to outflow of foreign currency reserve due
to repatriation of their profits
v It exhausts the host country’s resources
v It eliminates domestic producers
v It influences the national economy of the host
country
