What are the advantages and disadvantages …

Advantages of MNCs

• Access to Consumers – Access to consumers is one of the primary advantages that the MNCs enjoy over companies with operations limited to smaller region. Increasing accessibility to wider geographical regions allows the MNCs to have a larger pool of potential customers and help them in expanding, growing at a faster pace as compared to others.
• Accesses to Labor – MNCs enjoy access to cheap labor, which is a great advantage over other companies. A firm having operations spread across different geographical areas can have its production unit set up in countries with cheap labor. Some of the countries where cheap labor is available is China, India, Pakistan etc.
• Taxes and Other Costs – Taxes are one of the areas where every MNC can take advantage. Many countries offer reduced taxes on exports and imports in order to increase their foreign exposure and international trade. Also countries impose lower excise and custom duty which results in high profit margin for MNCs. Thus taxes are one of the area of making money but it again depends on the country of operation.
• Overall Development – The investment level, employment level, and income level of the country increases due to the operation of MNC’s. Level of industrial and economic development increases due to the growth of MNCs.
• Technology – The industry gets latest technology from foreign countries through MNCs which help them improve on their technological parameter.

Disadvantages of MNCS

1. Government diverts funds to protect MNCs for foreign investment, accumulates infrastructural facilities to them.
2. Tough competition to indigenous industries
3. Exploitation of cheap labour in lieu of low wages.
4. The poor do not get the benefits from MNCs, it leads to environmental degradation, displacements issues.