Explain any 10 disadvantages of Multinational Corporations ?
Each point should be well explained with reason .
Class - 10th
Chapter - Globalisation and the Indian Economy
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Answer:
List of the Disadvantages of Multinational Corporations
1. Multinational corporations can use their structure to form monopolistic markets.
Most countries treat the assets of a multinational corporation as an independent structure, like a transnational company, instead of looking at the hierarchy of the business for what it tends to be. This disadvantage allows each firm to have more flexibility in how they handle the local marketplace with their presence. Global monopolies do not currently exist, by firms like Alphabet, Illumina, and Broadridge all manage a 50% share or more of their industry.
When these structures are present and treated in this way, then the benefits of scale allow the multinational corporation to price everyone out of the market. There might still be local competition, but the average consumer will work with the cheapest offer whenever if provides a similar amount of value for them.
2. Because of their size, multinational corporations put SMEs out of business.
Did you know that 9 out of 10 companies will eventually fail? The most critical time for any small business is during the first five years of operation. About one-third typically fail in their first 12 months of existence. One of the contributing factors to this problem is the size and scale of multinational corporations. Bigger companies can produce larger bulk orders, which means they can see a per-unit price savings when compared to SMBs and SMEs.
“Multinational corporations do control,” said California Governor Jerry Brown. “They control the politicians. They control the media. They control the pattern of consumption, entertainment, and thinking. They’re destroying the planet and laying the foundation for violent outbursts and racial division.”
3. Multinational corporations often take advantage of the international standard of living.
Many states in the U.S. are approaching or exceeding $12 per hour for their minimum wage. Several of the 2020 Presidential candidates for the Democratic party are pushing for a $15 per hour minimum wage. The goal of this legislation is to provide a “living salary’ for workers who are putting in full-time hours to support their families, but it is also an effort that encourages more offshoring.
Answer:
List of the Disadvantages of Multinational Corporations:
1. Multinational corporations can use their structure to form monopolistic markets.
2. Because of their size, multinational corporations put SMEs out of business.
3. Multinational corporations often take advantage of the international standard of living.
4.Political corruption typically rises with the influence of a multinational corporation.
5. Multinational corporations can cause harm to the environment.
6.Profits often go back to the multinational company instead of staying in the local market.
7.. Nothing stops a multinational company from importing their skilled labor.
8.Multinational corporations remove raw materials from the local economy.
9.Individual influences are virtually impossible to create with multinational corporations.
10.It creates a dependency on the business that can be unhealthy for an economy.