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Advantages and Disadvantages of Transnational Corporations

In: Business and Management

Submitted By FThomas
Words 375
Pages 2
Advantages and Disadvantages of Transnational Corporations
Host Country: Advantages
1. The investment level, employment level, and income level of the host country increases due to the operation of TNC's.
2. The industries of host country get latest technology from foreign countries through TNC's.
3. The host country's business also gets management expertise from TNC's.
4. The domestic traders and market intermediaries of the host country gets increased business from the operation of TNC's.
5. TNC's break protectionism, curb local monopolies, create competition among domestic companies and thus enhance their competitiveness.
6. Domestic industries can make use of R and D outcomes of TNC's.
7. The host country can reduce imports and increase exports due to goods produced by TNC's in the host country. This helps to improve balance of payment.
8. Level of industrial and economic development increases due to the growth of TNC's in the host country.
Disadvantages
1. TNC's may transfer technology which has become outdated in the home country.
2. As TNC's do not operate within the national autonomy, they may pose a threat to the economic and political sovereignty of host countries.
3. TNC's may damage the domestic industry by monpolising the host country's market.
4. In order to make profit, TNC's may use natural resources of the home country indiscriminately and cause depletion of the resources.
5. A large sums of money flows to foreign countries in terms of payments towards profits, dividends and royalty.
Home Country: Advantages
1. TNC's create opportunities for marketing the products produced in the home country throughout the world.
2. They create employment opportunities to the people of home country both at home and abroad.
3. It gives a boost to the industrial activities of home country.
4. TNC's help to maintain favourable balance of payment of...

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