A multinational corporation is a company that controls businesses in more than one country. There are a wide array of companies that operate underneath this type of structure, and many receive criticism. What are the real pros and cons associated with running a business in more than one country? Let’s take a closer look.
The Pros of Multinational Corporations
1. Job Creation
These giant corporations do one thing well, and that is create jobs! They open job markets in areas of the world that desperately need them. This is beneficial in many different ways, including contributing to the influx of foreign currencies being exchanged.
2. It Is Cost Effective
The cost of products for the consumers is kept substantially lower thanks to these corporations. Wages and costs that in other countries are often much lower, which is a big reason that companies choose to go the multinational route. The money that they save is passed on to the customer, which is great for the economy.
3. Large Profit Margins Leads To Better Research
When companies are saving the amount of money on production and manufacturing as multinational corporations, they have the ability to pour large sums of money into researching and developing new and better products. Some great examples of this are pharmaceutical and motor vehicle companies that are stationed abroad.
4. Lowers Child Labor Role
Many multinational corporations argue that their presence in third world countries increases the local wealth that is being obtained. This reduces the need for children in families to go to work to help support the household.
The Cons of Multinational Corporations
1. They Have The Ability To Dominate The Market
Due to the low costs that they can achieve and the wide arrange of labor forces they can take advantage of, multinational companies have the ability to completely dominate whatever market they are in. This is bad for small businesses in the home country, as well as limits the options for consumers.
2. Exploitation of Workers
These large corporations venture to other parts of the world for multiple reasons, but the largest is the cheap labor that can be obtained in developing countries. The people in these regions are usually desperate for any form of work, and are willing to work for extremely low wages. Along with low wages, multinational corporations tend to force workers to work inhumanely long hours and in poor conditions.
3. The Environment Suffers Too
Multinational corporations typically require huge production and manufacturing set ups, which include environmentally damaging emissions and waste. When these companies set up all around the world, in countries that have lower standards environmentally for businesses, they are able to cause some serious damage with pollution.
4. Takes Jobs Out Of The Local Market
Arguably the worst aspect of multinational corporations is the fact that they are outsourcing labor that could easily be done in their home country. The job market in today’s time is already dwindling, and by removing large factories and production facilities takes away the possibilities of employment for local people.