MNC/FDI MindMap
Definition
of MNC/FDI
Disadvantages
of MNC/FDI
Reasons for the emergance
of the MNC/FDI
Advantages
of MNC/FDI
- Developing skills
- Developing capital
- Contributing to taxes
- More investment
in infrastructure
- More job opportunities
- Tax avoidance
Easy Access to Natural
Resources/Cheap Materials
- Environmental
Destructions
- Moving profit aboard
Multinational corporation.
Lower Transport &
Communication Costs
Economic of Scale
Large firms that sell to the global market (MNC)
will produce more than those who sell to domestic markets.
Large firms need to buy huge quantities
of resources from other countries.
Transportation costs have reduced
and the speed has increased.
MNCs like Apple and Google have been accused by political figures in the US and EU for not paying their fair share.
Access to
Global Customers
Firms can sell more goods and services in
global markets compared to domestic markets.
MNC can help investment in infrastructure
because it involves many countries contributing.
Features of
Multinational Companies
- Highly advanced technology
- Highly influential
(economically/politically)
- Powerful advertising
and marketing
- High efficiency
(produce more with less cost)
- Highly qualified and
experienced managers
- Huge Assets and revenue
The arrival of MNC encourage
local people to set up business.
MNC are extremely well-resourced (CAPITAL)
MNC can afford to hire the best people around the world
MNC have the ability to reduce their cost
from buying huge quantities of raw materials.
MNCs helps boost the stock
of capital in host countries.
When MNCs arrive, they will establish factories,
warehouses, shops, and other business facilities.
MNCs are considered suspicious by many environmentalists because they could cause environmental damage.
MNCs usually deny these claims by saying that they pay their taxes and are totally innocent.
The world media has focussed on tax avoidance,
particularly those done by powerful MNCs.
If multinationals (MNCs) can avoid taxes in nations with strong legal systems, it may mean that less developed countries have little chance of collecting their "fair share" of taxes from MNCs.
The increase tax revenue
can be used by the governments
to improve government services.
Owing the attractiveness of MNCs/FDI,
governments are more likely to invest
in infrastructure to attract investors which can benefit.
The reason is because MNCs have a large presence in the extraction areas, namely coal, oil, and gold mining.
MNCs often have to repatriation the income they make abroad.
MNC provide skills and motivation (encouraging locals
to supply services, transport, cleaning, etc).
GIving technical help,
training to gain skills.
To attract MNCs, less developed countries
started to spend more on education.
MNCs provide training and
work experience in foreign countries.
When a business sets up a facility like a factory,
they're likely to install up-to-date technology or
produce something new like the producer of BMW.
The plant also uses renewable energy sources
which supplied 100% carbon-free electricity.
MNC will also encourage
the investment of more capital projects.
If MNCs/FDI didnt operate business
in such countries, the valuable source
of revenue wouldn't have existed.
The profits made by MNCs
are taxed by the host nations.
Profits also are sent back to the nation where the MNC is located. As a result, the nation suffers.
This shows that MNCs help developed nations more than less developed nations. since the majority of MNCs have their headquarters in industrial countries.
Income in some countries can increase
if MNCs set operation overseas.
Local suppliers are likely to get work,
also for the workers, the jobs created
by FDI are often good and pays high wages.
Living standard can be improved there
because of the improvement of outpput
and employments (improved economic growth).
MNC is also known as a
“Transnational Company”
MNC play a big role
in the world economy.
Private companies which operate
in two or more nations/countries.
MNC can afford to take on large-scale projects