What are the disadvantages of MNCs

Ans. Disadvantage of MNCs are following :

• Laws: One of the major disadvantage is the strict and stringent laws applicable in the country. MNCs are subject to more laws and regulations than other companies. It is seen that certain countries do not allow companies to run its operations as it has been doing in other countries, which result in a conflict within the country and results in problems in the organization.
• Intellectual Property:Multinational companies also face issues pertaining to the intellectual property that is not always applicable in case of purely domestic firm
• Political Risks: As the operations of the MNCs is wide spread across national boundaries of several countries they may result in a threat to the economic and political sovereignty of host countries
• Loss to Local Businesses: MNCs products sometimes lead to the killing of the domestic company operations. The MNCs establishes their monopoly in the country where they operate thus killing the local businesses which exists in the country.
• Loss of Natural Resources: MNCs use natural resources of the home country in order to make huge profit which results in the depletion of the resources thus causing a loss of natural resources for the economy
• Money flows: As MNCs operate in different countries a large sum of money flows to foreign countries as payment towards profit which results in less efficiency for the host country where the MNCs operations are based.
• Transfer of capital takes place from the home country to the foreign ground which is unfavorable for the economy.