1.

Cheaper Labor
One of the advantages of multinational corporations is the opportunity to operate in countries where
labor is not as expensive. This is one of the perks that smaller companies do not enjoy.
Multinationals can set up their offices in several countries where demand for their services and
products are high while cheaper labor is available.
2. Broader Market Base
By opening establishments or offices in several countries, multinationals increase their chances of
reaching out to customers on a global scale, a benefit which other companies limited to regional
offices and establishments do not have. The access to more customers gives them more
opportunities to develop and cater their products and services that will fit the needs of potential
customers.
3. Tax Cuts
Multinationals can enjoy lower taxes in other countries for exports and imports, an advantage that
owners of international corporations can take at any given day. And although not all countries can
have lower tariffs, there are those that give tax cuts to investors to attract more international
companies to do business in these countries.
4. Job Creation
When international companies set up branches in other countries, employees and members of the
team are locals. That said, more people are given employment opportunities especially in developing
countries.

Advantages of Multinational companies on Host country:

Multinational companies are companies who have huge business operations and they operate in more
than one country. Multinational companies are headquartered in home country and they operate business
from host countries. In most cases, the home country is a developed country and the host country is a
developing nation. Multinational companies act locally but think globally (Edwards, Marginson and Ferner
2013). Multinational companies can act in different kind of business environments. The host country may
be endowed with many benefits by the multinational companies. However, multinational companies bring
with them relaxed code of ethical conduct that exploits the needs of the developing nations, instead of
providing a support important for economic and social development of the nation (Kobrin 2013). When a
multinational company makes investment in the host country, the ratio of investment has the likelihood of
increasing. Hence, governments with an intention of attracting more foreign investment offers incentives
to firms, offers grants and tax breaks. The advantages of the multinational companies may be
enumerated as follows:
Activities related to research and development: host countries lack in research and development areas.
Expenses on the research and development areas are important for the promotion of technology.
Multinational companies have greater ability for research and development activities in comparison to
host countries. Because of their capability of advanced search and development, multinational companies
have the capability of surviving in the international market (Marano and Kostova 2016).

Social, Economic and Political conditions of the host country: Multinational companies provide many
benefits to the host country by contributing to the economic growth of the country and increasing the
profits of the country. Additionally, multinational companies help the host country in the development of
new products and also help in reducing the operational and labour cost of the country. Entry of
multinational companies in a host country helps in changing the social and political structure of the
country. Therefore, this makes the resources available to the host country for their economic exploitation
(Hoskisson et al. 2013).

Product Innovation: Multinational companies have a strong research and development department that
help in the development of new product. Development of new product leads to diversification of products.
The opportunities that are related to product are greater as compared to national companies (Biersteker
2014).

Superiority of Market: Multinational companies have a security of brand reputation and this is why they
face fewer issues in selling their products by adapting to an effective advertising and sales promotion
methods (Campbell, Eden and Miller 2012).

Financial Superiority: Multinational companies have the capability to create funds in one country and use
the funds in another country. Multinational companies have good financial resources as compared to host
countries. Multinational companies have easier admission to capital markets (Javorcik 2014).

Technological Superiority: Because of technological superiority of the multinational companies the host
companies help in the development of technological field of the company. The multinational company
have the power to produce goods having international quality and standard (Lu et al. 2014).

List of Disadvantages of Multinational Corporations

1. Potential Abuse of Workers

Multinational companies often invest in developing countries where they can take advantage of
cheaper labor. Some multinational corporations prefer to put up branches in these parts of the world
where there are no stringent policies in labor and where people need jobs because these
multinationals can demand for cheaper labor and lesser healthcare benefits.
2. Threat to Local Businesses
Another disadvantage of multinationals in other countries is their ability to dominate the marker.
These giant corporations can dominate the industries they are in because they have better products
and they can afford to even offer them at lower prices since they have the financial resources to buy
in bulk. This can eat up all the other small businesses offering the same goods and services.
Chances are, local businesses will suffer and worse, close down.
3. Loss of Jobs
With more companies transferring offices and centering operations in other countries, jobs for the
people living in developed countries are threatened. Take the case of multinationals that create
offices in developing countries for their technical operations and manufacturing. The jobs given to
the locals of the host country should be the jobs enjoyed by the people where the head office is
located.
Multinational corporations have both advantages and disadvantages since it creates jobs but can
also end up in the exploitation of workers, among other things. And since they are most likely to stay,
it’s best to create policies to make globalization equitable.

Disadvantages of Multinational companies on Host country:

The following disadvantages are faced by the multinational companies:

Loss of sovereignty: Multinational companies do not take the national policies seriously. They tend to
disregard the national priorities of the country and protect their own interests. Therefore, there is
continuous threat to the host country for protection of their sovereignty and liberty. This ultimately leads to
loss of sovereignty to the people of the host country (Kostova et al. 2013).

Competition: For market promotion and development multinational companies have big budgets. They
provide competition to domestic countries and this makes them gain monopoly power. However, this can
be a disadvantage as the small companies will not get proper chance of securing their position in the
market (Lamare et al. 2012).

Outflow of resource: The multinational company uses the resources of the host companies in the form of
dividend of profits, licenses or management of other services. The continuous use of such resources may
lead to drainage of resources in the host company (Ramondo, Rappoport and Ruhl 2016).

Inappropriate Technology: The use of technology by the multinational company may either be out of date
or too advanced for the host country to follow. The local people may not receive proper training for this
leading to unemployment (Ruggie 2013).

Economic exploitation: multinational companies are guided by a motive of profit. They often tend to
exploit the host countries to make the most out of their host country. Multinational companies may offer
low pay wages to local people and they can charge high price of their products to make use of their
customers (Cooke 2012).

Socio cultural Evils: the multinational companies promote the values of their home country and this may
include dress, food and life styles. In this case the local cultures wickedness comes into picture. This
increases the gap between the rich and the poor as there is increase in the overall unemployment of the
country. It is always seen that multinational companies lack responsibility towards the host country
(Dyreng et al. 2015).