Updated: Feb 22
Multinational firms (MNCs) are large firms that operate in different countries
They usually originate from developed countries and are considered as foreign direct investments to developing economies. Being an MNC has manage advantages. They can
Reach many consumers as they would export their products
Better chance of raising capital for business expansion, research and development and recruiting high skilled workers.
Minimize transportation cost as they are located in multiple countries around the world.
Minimize wage cost as they may be located in developing countries where wages are low
Benefit from economies of scale through large scale production
Able to avoid trade barriers by operating in different countries in different regions.
Multinationals can benefit the country it operates in as they;
Provide employment to locals
Inject capital into the country through FDI
Provide more variety of goods and services
Increase demand for local businesses
Transfer technology and improve the skills of local talent
Contribute in taxes
Improves balance of trade as output is exported
Balance of trade