1.6 Multinational Companies

• A multinational company is an organisation that operates in two or more countries.
• Reasons to become an multinational company include increased customer base, cheaper production costs, economies of scale, brand development, avoiding protectionist policies and spreading risks.
• Host countries allow an multinational company to set up in the country. Advantages include job creation, higher national income, knowledge and technology transfer and increased local competition. Disadvantages include job losses, repatriation of profits, vulnerability, social responsibilities and competitive pressures.