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MNC Advantages and Disadvantages | Pros and Cons of MNC (Multinational Corporation), Benefits and Drawbacks

MNC Advantages and Disadvantages: A multinational corporation is an organization that has its resources in its own nation and in other countries too. MNC work globally by having their offices and factories in different countries or at least in more than one country and a centralized head office in their own country. These mega organizations produce goods and control their services in different countries including their own country. MNC has high turnover and many assets and this also helps in the economical growth of the country. Some of the examples of an MNC are TechMahindra, Capgemini, LTI, TCS, etc. All these global enterprises are from India which gives services to many countries.

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What is MNC? MNC Advantages and Disadvantages 2022

As the name suggests, a multinational corporation is an organization that provides services to two or more countries including its own nation. Many multinational corporations are based in developed nations. They produce the goods and provide their services to many countries and control services from headquarters which are located usually in their own country. In India, there are so many multinational corporations working to help the country to develop economically, for example,  TechMahindra, Capgemini, LTI, TCS, Infosys, etc. An MNC is given benefits to host countries like offering new job opportunities, a wider consumer base, and high turnover. There are basically three types of MNCs

  • Regional: Here the company sets a headquarter in its own country but builds many offices in other countries which are in the control of the headquarters to see subsidiaries and affiliates.
  • Centralized: In this type, MNC has headquarters in their home country and puts factories in different countries, this helps the company to lower their production cost.
  • Multinational: In multinational subsidiaries and affiliates are independently looked by offices that are under the headquarters.

There are some drawbacks of it: inappropriate technology, economic exploitation, and for making a profit can exploit nature.

Let us discuss the advantages of MNCs and understand their requirements.

MNC Advantages

MNCs have many benefits which are not only good for people but also help in the growth of the country, some of the advantages are:

Production cost can be reduced: MNCs set up their manufacturing plants in various countries that help them to make production cost-efficient. They get the benefits of increased production and can grow their brand.

Good quality products: Due to global manufacturing access companies get a chance to get good raw material which helps them to come up with good quality products. Great products grow their brand’s name in the local as well as global market.

Growth is high: As compared to other local companies MNCs pay more to their employees which attracts more labour force. MNCs give local taxes that also help in the country’s economic development.

More employment: MNCs give chances to local labourers as they know the culture of their places that help to manufacture products according to the needs of the locals. Thus there is more hiring of local labourers who help companies to grow.

New inventions: More products that are useful are invented as the local labourers help them to give more understanding of local equipment with the help of other company employees.

As there are many benefits of an MNC, also there are some drawbacks that must be discussed:

MNC Disadvantages

Here are a few disadvantages of MNCs:

The exploitation of laborers: The multinational cooperation gives all the facilities to locals to learn skills and after that, the company starts earning more profits from the local’s and in return the labourers don’t get any profit and have struggled with low income.

Dominate the host country’s supremacy: MNCs slowly build their assets in the host country and indirectly dominate the country’s freedom.  As they pay local taxes and give employment to people so sometimes the government also gets dominated.

Increase pollution:  The multinational corporation uses local raw materials to get more benefit and that leads to more manufacturing. To get the raw materials natural resources are exploited. And also air and land pollution is increasing.

Import skilled labourers: To get better products sometimes multinational corporations train local labourers but to get quick results they hire skilled labourers from other countries too which affects the host country’s economic growth. There is also job risk for the local employees as the MNCs can fire the labourers for their benefits.

Build legal monopolies: The Government treats each location as their own entity, even though the assets controlled by multinational corporations are managed by a centralized structure. MNCs have the freedom to handle their business but some companies come close to making a monopoly.

MNC Advantages and Disadvantages

Comparison Table for Pros and Cons of MNCs

Pros Of MNC Cons Of MNC
Production cost can be reduced as they get local labourers and raw materials Exploitation of labourers increases
Good quality products can be produced Dominate the host country’s supremacy
Growth of economical development is higher Increase air and land pollution
More job opportunities are created Import skilled labourers reduce the fair chance to locals
Chances of new inventions Build legal monopolies
Decrease product prices Danger for local companies
Improve the way of living standards Gain more profit ten they generate

FAQs on MNCs advantages and disadvantages

Question 1.
What is MNC?

Answer:
A multinational corporation is an organization that has its resources in its own nation and in other countries too. These mega organizations produce goods and control their services in different countries including their own country.MNC work globally with having their office and factories in different countries or at least in more than one country and a centralized head office in its own country.

Some of the examples of an MNC are TechMahindra, Capgemini, LTI, TCS, etc. All these global enterprises are from India which gives services to many countries.

Question 2.
What are the advantages of MNC?

Answer:
MNCs provide good quality products with innovation, also help in the employment in the host country also higher assets and great income source. some of its benefits are:

  • Production cost can be reduced
  • Good quality products
  • Growth is high
  • More employment
  • New inventions

Question 3.
What are the disadvantages of multinational cooperation (MNC)?

Answer:
The following are some disadvantages of MNCs;

  • Exploitation of laborers
  • Dominate the host country’s supremacy
  • Increase pollution
  • Import skilled laborers
  • Build legal monopolies

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