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Worksheet 10: The importance and growth of multinational

companies
Section 1: The importance and growth of multinationals to the business
List the benefits and drawback of a business becoming a multinational using the tables below.
Students should consider the advantages and disadvantages to the business.

Advantages - to the business


Advantages Explanation
Larger Customer Base Since multinationals are available around the
world for different companies, they will have
access to a much wider market which would
lead to a larger customer base.

Lower Costs Since multinationals are large companies, they


can exploit economies of scale which would
allow them to enjoy lower costs.
Higher Profile Since multinationals are large companies that
are available around the world, this allows
them to acquire a strong brand name which
would give the higher profile which attributes
to their success.
Avoiding Trade Barriers Multinationals can bypass trade barriers
because they are prepared to set up operations
in other countries.
Lower Taxes Multinationals can reduce the amount of tax
they pay on their profits by basing their head
offices in countries where taxes are lower.

Disadvantages - to the business


Disadvantages Explanation
Employees could go to jail

Increase legal burden.

Public relations

More responsibility

© Pearson Education Ltd 2017. Copying permitted for purchasing institution only. This material is not copyright free.
Section 2: The importance and growth of multinationals to the host country
List the benefits and drawback of a business becoming a multinational using the tables below.
Students should consider the advantages and disadvantages to the country and/or economy where a
multinational is located.

Advantages - To the country and/or economy where a multinational is located

Advantages Explanation
Increase in income and employment. When multinationals set up operations
overseas, income in those countries rises.

Increase in tax revenue. The profits made by multinationals are


taxed by the host nation. This money can
be used for improvement for the country
Increase in exports.

Transfer of technology Multinationals often provide foreign


suppliers with technical help, training

Improvement in the quality of human


capital

Disadvantages - To the country and/or economy where a multinational is located

Disadvantages Explanation

Environmental damage

Exploitation of less developed countries

Repatriation of profits

Lack of responsiblity

© Pearson Education Ltd 2017. Copying permitted for purchasing institution only. This material is not copyright free.

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