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multianational business effect on governments - Coggle Diagram
multianational business effect on governments
multiantional
An international business which operates and trades in several countries
mne
multinational enterprise
Owner has full decision making and authority
mnc
multinational corporation
Decision making and authority is shared between a board of directors
multinational companies are usually very large companies around the world that may have a head office based in one caountry but manufacturing or service facilities in other countries
benefits and drawbacks of a multinational to a country
benefits
increase in taxes
an injection into the local economy that it enters
can give jobs to the people of the country
MNE's provide training and education for employees
more services or goods provided for the people of the country
helps the world knowledge and understanding of other countries
increase in exports
Improvement in the quality of human capital
enterprise development
drawbacks
can afford to charge low prices as a large business, pushing smaller local competition out
Often so large that they can influence government's decisions with regards to grants, tax and land.
If a company leaves a country lots of people will lose their job, the big company won't pay more taxes. No injection on the economy. This makes the government want to keep large businesses resulting on the business having influence in governemnt decision
often employ 'home nation' manegers, meaning high wage jobs aren't given to locals
enviromental damage
how have multinationals developed
economies of scale
Large companies are able to lower the cost of production. THis is because they can produce goods and services around the world where labour and supplies are cheaper to make in large quantities
marketing
heavy advertising and innovative marketing attracts customers globally. They can afford marketing campaings
techincal and financial superiority
multinationals have developed advanced technology and a huge bank of knowledge, which they use to do research and development to create new products and services.
benefits of becoming a multinational
lower cost
high profile
larger customer base
avoiding trade barriers
lower taxes
drawback of being a multinational
explotation of less developed countries
companies will produce their products by using people who have a low salary or even kids
repatriation of profits
the profits of the country goes to the main company
enviromental damage
lack of accountability