Reasons For The Importance And Growth Of Multinational Companies (MNCs):
Overview
Some companies are bigger than entire countries. A multinational makes and sells its products across many nations at once, employing hundreds of thousands of people and shaping the economies it enters. When such a giant arrives in a country, it brings jobs and investment, but also questions about who really benefits.
In this lesson you will learn why businesses become multinational and the benefits this brings them, and then weigh the gains and drawbacks for the countries that host them. You will be able to argue both sides and reach a balanced judgement on whether an MNC is good for a host country.
Objectives
- Benefits to a business of becoming a multinational and the impact on its stakeholders
- Potential benefits to a country and/or economy where a MNC is located, e.g. jobs, exports, increased choice, investment
- Potential drawbacks to a country and/or economy where a MNC is located, e.g. reduced sales of local businesses, repatriation of profits
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Lesson Evaluation
Congratulations on completing the lesson on Reasons For The Importance And Growth Of Multinational Companies (MNCs):. Now that youve explored the key concepts and ideas, its time to put your knowledge to the test. This section offers a variety of practice questions designed to reinforce your understanding and help you gauge your grasp of the material.
You will encounter a mix of question types, including multiple-choice questions, short answer questions, and essay questions. Each question is thoughtfully crafted to assess different aspects of your knowledge and critical thinking skills.
Use this evaluation section as an opportunity to reinforce your understanding of the topic and to identify any areas where you may need additional study. Don't be discouraged by any challenges you encounter; instead, view them as opportunities for growth and improvement.
- A multinational company is a business that: A. sells only in its home country B. has operations in more than one country C. is owned by the government D. makes only one product Answer: B
- Which is a reason a business becomes multinational? A. to repatriate profits to the host B. to access cheaper labour or new markets C. to pay higher taxes D. to reduce its market Answer: B
- Which is a benefit to a host country of an MNC? A. repatriation of profits B. jobs and investment C. harm to local firms D. decisions made abroad Answer: B
- Sending profits earned in a host country back to the home country is called: A. foreign direct investment B. repatriation of profits C. a trade barrier D. an export Answer: B
- A drawback to a host country of a large MNC is that it may: A. create local jobs B. bring new technology C. drive local firms out of business D. raise exports Answer: C
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Recommended Books
Further learning from open sources
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Textbook section
The Impact of Multinational Corporations
What are the advantages of multinational corporations?
"Introduction to Business: The Impact of Multinational Corporations" by OpenStax, OpenStax, Rice University, licensed under CC BY 4.0 (https://creativecommons.org/licenses/by/4.0/). Source: https://openstax.org/books/introduction-business/pages/3-8-the-impact-of-multinational-corporations. Access for free at https://openstax.org/books/introduction-business/pages/1-introduction
Published by other organisations under open licences, credited as they ask. Links open their websites.
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