Management Essay

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Multinational Companies – Advantages & Disadvantages Multinational or transnational companies have a number advantages and disadvantages for both the parent as well host country. Advantages & Disadvantages of MNCs for Parent Country Following are some key benefits of the MNCs for parent country: • MNCs result in a significant increase of foreign exchange reserves • MNCs assist parent country in building good relations with other countries • MNCs assist in the promotion of parent country’s culture and traditions in other countries Whereas a few disadvantages associated with MNCs for parent countries are as follows: • MNCs share innovative and advanced technologies and equipments with host countries that allows such countries to reduce their dependence on parent country • Instead of providing employment opportunities in own countries, MNCs focus in employment generation in host countries • Parent country may lose its monopoly on various strategic technologies and equipments due to MNCs. • Intense trend of outside investment may result in severe capital flight Advantages & Disadvantages of MNCs for Host Countries Advantages for host countries, are as follows: • MNCs result in capital inflows and start expensive and state of the art projects in the host country that country itself cannot afford. • MNCs result in technology and knowledge sharing with the host country • MNCs generate employment opportunities in the host country • MNCs train and equip the local human capital with modern technologies and skills • MNCs help host countries to improve their relationships with companies’ parent countries • MNCs provide high quality and modern facilities and services to the consumers of host countries Disadvantages: • MNCs take their profits out of the host countries in Dollars that causes a reduction in foreign reserves for host countries. • MNCs increase

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