In this section the author is going to examine both the positive and negative impacts that MNC has on the host and home country. Root (1990) examined the positive contribution of MNC toward the world economy. He goes on to mention that MNC has been compared to the national corporation in building a single national economy by moving capital, technology and entrepreneurial skill from one region to the other region. Furthermore, he added that MNC are innovator, that through international production and trade, MNC quickly spreads new ideas, products, production functions and methods of management on a global scale.
It is obvious that the present of multinational organisation can have both a positive …show more content…
Another factor is that as MNC enters a new market, they tend to have their own supplier and the local business who would have been the provider of those supplies before would be written off and they would ultimately ran out of business and they would be force to close down. As local firms are unable to compete with big multinational company they would have to shut down.
• Leakages: Leakages are seen as the biggest negative impact of MNC. As they makes profit those profit has the tendency to leave the host country and go back to the home country of the organisation. Which is then being invests in the home country. Furthermore, employment can be seen as a leakage as the MNCs tend to bring their employees from their different overseas branches as a result no job creation are available for the host country.
• Loss of local spaces: When MNC settles in a new market they tend to use the local spaces to set up their buildings where they would be operating. That space could have been use for different purpose for the local community. This can also destroy the image of the host country as MNCs tend to have very high structured …show more content…
Costs of Multinational on home country
• Import expenses: As the MNC start to enter new markets they are likely to bring the production line in the new market place, as a result the home county would then have a high level of import as they will have to import the products that was once produce in their home country.
• Lack of competition: while MNC enters new market their home country suffer from the lack of competition, this could lead to monopoly as their rival would have the power to control the market.
This report is made up of the different structures of multinational companies. And we look at why does firms consider the factor of multinationalise. From the study is it clear that multinational companies play a vital role in both its host and home country. As it is known that multinational involve foreign investment it is important for country to measure the level of investment that a multinational is investing in their economy. As discuss above while multinational have its benefits it also comes with its negatives aspect both to the host and home