The Impact Of Multi-National Companies Edited by Sirjan Singh MYP11G

Introduction Multi-national or Transnational companies are corporations which locate their factories throughout the world, but their main area of operation is still in the home country. These home countries are usually one of the most developed countries such as USA or UK. The idea of these corporations stemmed from globalisation, the idea of one mind, and PEST. With the moving of the economy, politics, more accessibility to technology, culture and ideological integrations, organizations could open up branches in other countries. They know no and can transcend boundaries as a result. This has given them benefits, such as access to the world market, cheaper labour and production costs, and etc. resulting in greater profits. This leaves place for these corporations the opportunity exploit the countries and bring other disadvantages as well. They perform this often in more free market economies, as they do not have much governmental control. It is much easier to employ local staff and there is more accessibility to resources as a result.

It’s about the Money Most of the largest multi-national companies or sometimes transnational corporations are either oil companies like BP and Exxon or car companies like Ford and Toyota. However, other well-known companies such as Coca-Cola, IBM and Sony are also defined as being multi-national. Companies that are multinational or transnational (even larger) accomplished the setting up of branches and factories for their own benefit. They want to make as much money as possible, and bring with them advantages and disadvantages to the countries that host them.

How do Multinationals Affect Host Countries? Investment: Advantages: The companies bring much needed money into the country allowing better foreign trade. Although most of their profits do return to the company's country of origin, the local economy does benefit. Disadvantages: The wages paid to local workers are often low and some companies have been accused of exploiting the local workforce and cheap resources rather than benefiting it. They also profits out of the country, meaning that the actual economic benefit to the country could be minimal.

How do Multinationals Affect Host Countries? Technology: Advantages: The companies help the development of the country by bringing in technology, knowledge, research and development, that the host country often does not possess, as they are often developing countries. Disadvantages: Unless the company actively participates in a program to educate local companies in the new technologies, the country's industry will not really benefit. Multi-national companies might also be worried by sharing too much information, as they could find themselves with increased competition from local companies.

How do Multinationals Affect Host Countries? Transport: Advantages: The new companies often help to improve transport links around the area. Disadvantages: The transport links that do receive financial help from the multi-nationals often only serve as the direct routes of that company, not the wider area as well.

How do Multinationals Affect Host Countries? Employment: Advantages: They create job opportunities for the local population (though as a means of getting cheaper labour.) Furthermore, if skilled enough, local employees can get managerial experience and possibly take over jobs of the foreign employees in time. Disadvantages: Often the jobs are highly skilled and therefore, the company brings in their own people to do them, and for a very long time. This could even be indefinite in some cases. Furthermore, the technological nature of many of these companies means that there are not as many jobs as there might have been.

How do Multinationals Affect Host Countries? Growth poles: Advantages: The new multi-national companies act as growth poles for other similar companies. They could encourage more companies to locate in that country once they see the benefits that it brings. Disadvantages: Only a limited range of companies find that moving to a Developing World location is beneficial. They will only move there if it makes economic sense for the country. They do not consider the potential benefits to the host country. They also use up the resources that many domestic companies use, making these domestic corporations ‘squeeze’ and close down.