ACTIVITY 1.6.6
1. List two examples of multinational companies that have invested in South Africa.
The two examples of multinational companies that have invested in South Africa are
BMW and Volkswagen.
2. Explain two possible reasons for multinational companies setting up factories in South
Africa.
One of the possible reasons as to why multinational companies would decide to set up
factories in South Africa is for the low operational costs. Considering that South Africa is
a developing country, the operational cost would relatively be lower when compared to
developed countries. Furthermore, employees’ salary will also be lower, which will
ultimately be advantageous for the multinational company as it helps reduce the costs
while still maximizing the profit.
Another possible reason multinational companies would want to open up factories in
South Africa might be due to close access to the required resources. South Africa is a
country rich with resources that some multinational companies might need to make
their products. For instance, according to the case study, South Africa has become a key
supplier of motor-industry components, starting from windscreens to exhaust pipes. As
a result, multinational companies specifically invested in South Africa so as to have an
easier access to the available equipment and materials needed to make their products.
3. Analyze two possible benefits South Africa might gain from investment by
multinational companies.
One possible benefit South Africa might gain as a result of receiving investments from
multinational companies would be a reduce in unemployment rate. This is because the
opening of new factories would mean an increase in the amount of job opportunities
available for the locals. This will then certainly boost the country’s economy growth.
This is because more workers would mean more goods and services are being provided,
and when workers receive their wages, there are higher chances for more goods and
services to be purchased, thus affecting to the economic growth.
Another possible benefit South Africa might gain would be a boost in tax revenues to
the government. The existence of multinational companies would mean more money
will be given to the government, which could then be used for the development of the
country. Therefore, the investment of multinational companies can somehow indirectly
boost the development of a country, which could be in terms of infrastructure,
improved health services or education and etc.
4. Evaluate whether the South African government should continue to support
investment by multinational businesses in its economy.
Multinational businesses can be defined as business organizations in which its
headquarters is in one place, but its branches also operate in other countries. Referring
1. List two examples of multinational companies that have invested in South Africa.
The two examples of multinational companies that have invested in South Africa are
BMW and Volkswagen.
2. Explain two possible reasons for multinational companies setting up factories in South
Africa.
One of the possible reasons as to why multinational companies would decide to set up
factories in South Africa is for the low operational costs. Considering that South Africa is
a developing country, the operational cost would relatively be lower when compared to
developed countries. Furthermore, employees’ salary will also be lower, which will
ultimately be advantageous for the multinational company as it helps reduce the costs
while still maximizing the profit.
Another possible reason multinational companies would want to open up factories in
South Africa might be due to close access to the required resources. South Africa is a
country rich with resources that some multinational companies might need to make
their products. For instance, according to the case study, South Africa has become a key
supplier of motor-industry components, starting from windscreens to exhaust pipes. As
a result, multinational companies specifically invested in South Africa so as to have an
easier access to the available equipment and materials needed to make their products.
3. Analyze two possible benefits South Africa might gain from investment by
multinational companies.
One possible benefit South Africa might gain as a result of receiving investments from
multinational companies would be a reduce in unemployment rate. This is because the
opening of new factories would mean an increase in the amount of job opportunities
available for the locals. This will then certainly boost the country’s economy growth.
This is because more workers would mean more goods and services are being provided,
and when workers receive their wages, there are higher chances for more goods and
services to be purchased, thus affecting to the economic growth.
Another possible benefit South Africa might gain would be a boost in tax revenues to
the government. The existence of multinational companies would mean more money
will be given to the government, which could then be used for the development of the
country. Therefore, the investment of multinational companies can somehow indirectly
boost the development of a country, which could be in terms of infrastructure,
improved health services or education and etc.
4. Evaluate whether the South African government should continue to support
investment by multinational businesses in its economy.
Multinational businesses can be defined as business organizations in which its
headquarters is in one place, but its branches also operate in other countries. Referring
