Multinational corporations provide the different developing countries all over the world with the much needed financial infrastructure to achieve social and economic development. But together with the benefits that they offer come ethical conduct which happens to exploit the neediness of these developing nations.
Are multinational corporations really advantageous to a country or are they heavy weights that need to be let go for a nation to move forward all on its own?
The 4 Pros of Multinational Corporations
Below are some of the remarkable advantages that multinational corporations have to offer:
1. Size of Corporations Benefit From Consumers
The operational scale and size of corporations give them the chance of benefiting from the economies of scale that paves the way for lower average prices and costs for the consumers. It is particularly essential for those industries that carry extremely high fixed costs, like airlines and car manufacture.
2. Corporations Create Jobs And Wealth
The inward investment of these global companies offers the much required foreign currency for the developing economies. Also, these economies help in the creation of jobs and increasing expectations of the things that are likely to happen.
3. Minimum Standards Are Ensured
Multinationals usually succeed because the consumers prefer to purchase services and products on which they can go for minimum standards. For instance, when visiting a country, it will be easy for you to identify that Starbucks can offer you something that you are familiar with and though this might not be the best that you can find in the area, at least, it will not be the worst either. There is always security when you know what you can expect for.
4. Large profits Consumed For Development And Research
For instance, oil exploration is both risky and costly. Only large firms can undertake it with significant resources and profit. The same thing goes for the drug manufacturers.
The 5 Cons of Multinational Corporations
This time, take a look at the disadvantages linked to multinational corporations:
1. The Market Dominance Of Multinational Corporations
The market dominance of multinational corporations makes it hard for the local small firms to succeed and thrive. For instance, there are arguments stating that the larger supermarkets squeeze out a notable margin of the local corner stores that lead to lesser diversity.
2. Consumer’s Expenses
Companies are usually interested at the consumer’s expense. The multinational companies commonly have the power of monopoly that gives them the chance of making excess profit.
3. Pushing Local Firms Out Of Business
In the developing economies, these giant multinationals use the economies of scale for pushing the local firms out of their businesses.
4. Criticized For Using Slave Labor
Multinational corporations are being criticized for using the so-called slave labor wherein the workers are paid with very small wages.
5. Environment Threat
For the sake of profit, these global companies commonly contribute to pollution as well as make use of the non-renewable resources that can be a threat to the environment.
How Do You Feel About Multinational Corporations?
While it is true that multinational companies bring a lot of job opportunities, there is also no denying that they are the cause of some major issues in the economy. How about you? Do you think they are beneficial or only a big threat in countries?