Cocal Cola is an example of a Multinational Company. Image credit source.co.zw

Cocal Cola is an example of a Multinational Company. Image credit source.co.zw

ZIMSEC O Level Business Studies Notes: Multinational Companies/ Trans National Companies

  • These are large limited liability companies with branches in other countries and a headquarters in one country.
  • Control is centralized and products have very similar features
  • for example Zimplats (Implats), Coca Cola, Shell and BP.

Advantages

To host country

  • Multinational companies bring several advantages to the host country including the following:
  • They create employment.
  • Improve infrastructure.
  • Increase the country’s GDP and standard of living.
  • Improves the skills of the host country’s workforce through training.
  • Brings the latest technology to the host country.
  • Bring in foreign currency.

To the company

  • Multinational companies enjoy several advantages themselves as a result of their nature.
  • These include:
  • Cheap raw materials.
  • Spreads the risk of failure by spreading it to different countries.
  • Circumvents trade barriers.
  • Cheap labor
  • Enjoy economies of scale.

Disadvantages

To host country

  • 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.

To the company

  • Multinational companies also suffer from certain disadvantages as a result of their nature
  • These include:
  • 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 O Level Business Notes page.

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