what are the advantages & disadvantages of MNCs?

AdvantagesDisadvantages
Better employment opportunitiesExploitation of cheap labour in lieu of low wages
Employment of new technologiesTough competition to indigenous industries
Improvement in infrastructuregovernment diverts funds to protect MNCs for foreign investment, accumulates infrastructural facilities to them
Availability of goods in varietyThe poor do not get the benefits from MNCs, it leads to environmental degradation, displacements issues.

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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.




Disadvantages include:

  • 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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