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Multinational companies are large business firms established and operated in two or more countries. (4) Export Promotion Multinational company helps developing countries in earning foreign exchanges and improves the Balance of payment. However, transnational companies often face criticisms when they avoid higher tax rates, form monopolies, and cause smaller businesses in the region to suffer. Multinational Corporations no doubt, carryout business with the ultimate object of profit making like any other domestic company. Such uncertainty may lead to internal problems in the country. 2. However, others feel that foreign companies should be shut out and instead the government should help local companies to contribute to economic growth. MNCs are the multinational corporations of the developed countries. Thus, they transfer a huge amount of the country’s foreign exchange reserves by way of royalties, fees, dividends, etc., to their home countries. They are known by various names such as global enterprise, international enterprise, world enterprise, transnational corporation, etc. Multinational Companies Essay – Some developing countries invite large multinational companies to open offices and factories in order to help their economy. The country that dominated and fully controls the foreign trade is USA, Europe and Japan. Cite 15th Jan, 2014 Although they have various advantages, they suffer from certain disadvantages or drawbacks such as high competition, loss of sovereignty, outflow of resources, economic exploitation etc. These companies infuse capital in developing countries and increase employment, income and investments level, hence … Exploitation of labour. Advantages Multinational Companies (MNCs) are: Multinational companies have international presence, which enables technical and managerial knowledge transfer to under developed and developing nations. Advantages and Disadvantages of Multinational Companies (MNCs). These companies assist local producers to enter the global markets through their well established international network of production and marketing. Disadvantages. Political interference in some countries. Social cost and environmental degradation. The disadvantages of multinational company are as follows:-(1) High Profit Low Risk Investment: The multinational company prefer to invest in areas of low risk and high profitability. The disadvantages. Brings in unfair competition onto local infant industries. They have many advantages such as large financial, other resources, best technology, research and development, skilled employees and managers. Issue like social welfare, national priority etc. Companies remit back their profits to parent companies thus reducing the benefits of increased; standard of living. Transnational companies can choose where manufacturing occurs, often selecting countries with low wages and minimal restrictions for cost-saving purposes. Multinational Corporations (MNCs) are the organizations that own goods or services in more than one country throughout the world. have less priority on their agenda. The disadvantages are described as follows: 1. However countries like Nigeria or generally speaking resource based developing countries with a corrupt administrative structure are in danger of excess exploitation by MNCs. These days MNCs belonging to the developed countries are usually making huge investments in the developing countries for the benefit of their home country. Control: ADVERTISEMENTS: MNCs often exert control […] Uncertainty: MNCs often scale down their production facilities and close the operations in situation of economic uncertainty. They practise hire and fire; hence, people employed in MNCs often lose their jobs. The disadvantages of natural resources to developing countries is lack of processing facilities.

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