Multinationals

Question 1

What are the advantages of multinational businesses?

Answer 1

• Wages and raw materials costs are lower in the host countries.
• Businesses can avoid legislation in their home country.
• Grants can be issued by governments to locate in their country.
• Businesses can avoid quotas (retraction on amount on imports/exports) and tariffs (taxes on imports/exports) issued by their own governments

Question 2

What is a multinational business?

Answer 2

A multinational is a business that has operations in more than one country. The could be worldwide retail outlets such as IKEA or just retail outlets in one country and a production facility in another.

Question 3

What are the disadvantages of multinational businesses?

Answer 3

• Language barriers can slow down communication.
• Cultural differences can affect production, e.g. ‘siestas’ in Spain.
• Exchange rates can affect purchasing and paying expenses in different countries.
• Time differences can hinder communication between head office and branches around the world.