Delta is a local example of an MNC. Image credit Nehandaradio.com

Delta is a local example of an MNC. Image credit Nehandaradio.com

ZIMSEC O Level Commerce Notes: Business Organisations: Advantages and Disadvantages Multinational Companies

Advantages

  • Pays taxes to increase revenue for the host government.
  • Creates employment to local people.
  • Brings the latest technology to the host country.
  • Brings foreign currency to the host country.
  • Bring skills and machinery to the host country.
  • Improves the Balance of Payment for the host country.
  • Improves the GDP and standards of living in the host country.
  • Enjoys economies of scale.
  • Gets access to cheap labour.
  • Circumvets barriers to trade.

Disadvantages.

  • Exploitation of labour.
  • Social cost and environmental degradation.
  • Companies remit back their profits to parent companies thus reducing the benefits of increased
  • standard of living.
  • Political interference in some countries.
  • Brings in unfair competition onto local infant industries.
  • Increased risk of loss of company due to political instability
  • Complex legal requirements from country to country.
  • Complex macroeconomic environments

To access more topics go to the Commerce Notes page.


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