Multinational corporations Questions
with Answers
What's a multinational corporation? - answer A multinational corporation is a
company that has business operations in at least one other country than Its home
country.
What are the benefits to the host country of an MNC? - answer Tax revenue, jobs for
host nationals, boost economy, transfer skills and capital, increased competition - lower
prices and improvement in working practices.
What's the benefits for a MNC in expanding to another country. - answer Increased
skilled employees, cheaper supply, increased profits and lower factor costs (land,
labour, capital and raw materials).
What are the drawbacks for the host country of a MNC? - answer increased
competition leads to local companies going out of business, exploitative pay and
working conditions - health and safety, may not benefit local economy (profits
transferred), environmental externalities
What's an example of exploitative pay and working conditions? - answer Bangladesh
clothing manufacturing and apple working conditions in China
What's an example of an environmental externality? - answer Pollution
What are the drawbacks for an MNC of expanding to another country? - answer Not
skilled workers, commercial risk of failure, longer lead times for operations, lose out to
local competitors, restrictions on contractual terms with host nations
Give two examples of restrictions on contractual terms with host nation? - answer
Train x% of local staff or purchase only from local suppliers.
What's the implication of not skilled workers? - answer Takes longer to train workers
and may delay operations.
tax avoidance - answer Avoiding tax in a jurisdiction this is legal generally speaking.
tax evasion - answer Avoiding tax in a jurisdiction this is illegal generally speaking.
What are inputs for a company? - answer Purchases such as raw materials, staff
costs and equipment.
What are outputs for a company? - answer Sales, goods and services.
with Answers
What's a multinational corporation? - answer A multinational corporation is a
company that has business operations in at least one other country than Its home
country.
What are the benefits to the host country of an MNC? - answer Tax revenue, jobs for
host nationals, boost economy, transfer skills and capital, increased competition - lower
prices and improvement in working practices.
What's the benefits for a MNC in expanding to another country. - answer Increased
skilled employees, cheaper supply, increased profits and lower factor costs (land,
labour, capital and raw materials).
What are the drawbacks for the host country of a MNC? - answer increased
competition leads to local companies going out of business, exploitative pay and
working conditions - health and safety, may not benefit local economy (profits
transferred), environmental externalities
What's an example of exploitative pay and working conditions? - answer Bangladesh
clothing manufacturing and apple working conditions in China
What's an example of an environmental externality? - answer Pollution
What are the drawbacks for an MNC of expanding to another country? - answer Not
skilled workers, commercial risk of failure, longer lead times for operations, lose out to
local competitors, restrictions on contractual terms with host nations
Give two examples of restrictions on contractual terms with host nation? - answer
Train x% of local staff or purchase only from local suppliers.
What's the implication of not skilled workers? - answer Takes longer to train workers
and may delay operations.
tax avoidance - answer Avoiding tax in a jurisdiction this is legal generally speaking.
tax evasion - answer Avoiding tax in a jurisdiction this is illegal generally speaking.
What are inputs for a company? - answer Purchases such as raw materials, staff
costs and equipment.
What are outputs for a company? - answer Sales, goods and services.
