6.3.2 Multinational Companies (MCNs)
Instruction :
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Go through all instructions and course details thoroughly before starting each lesson or activity.
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Watch the attached video lessons attentively and take clear, organized notes in your notebook.
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Write all answers for the attached worksheets in your notebook. Make sure your work is neat and properly labeled.
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Revise your notes and completed worksheets after each lesson to reinforce understanding.
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If you face any difficulty or have questions, note them down and contact your instructor or course coordinator for guidance.
Click to download the Video Lecture Handout.
Good morning everyone!
Today, we’re going to learn about multinational companies, also known as MNCs. These are large businesses that operate in more than one country. Usually, they have their headquarters in one country, called the home country, and factories or branches in other countries, known as host countries. Some popular examples include Coca-Cola, Unilever, Toyota, Nestlé, and Samsung. These companies have products that are sold and recognized all over the world — from soft drinks to smartphones.
Now, you might be wondering — why do businesses want to become multinational?
Well, there are several reasons. The first one is access to larger markets. When a company sells in many countries, it can reach millions of new customers. This helps increase sales and profits. For example, KFC expanded into Asia and Africa to reach more people who love fast food.
Another reason is lower production costs. Many MNCs set up factories in countries where labour and materials are cheaper. For instance, many electronic companies produce their goods in Vietnam or Bangladesh because wages are lower there. This helps them make products at a lower cost and sell them more competitively.
MNCs also enjoy economies of scale — meaning, as they produce more, their average cost per unit falls. They can buy materials in bulk and spread their expenses over a larger number of products. On top of that, they can access skilled labour and resources from different parts of the world. For example, a tech company might open an office in India to hire skilled software engineers.
And finally, being multinational helps build brand recognition. When people across the world recognize your brand, it gives you a strong advantage. Think of Apple — its products are sold globally, and the brand stands for quality and innovation everywhere.
Now, let’s talk about the impact of MNCs on different groups of people, or what we call stakeholders.
For shareholders, becoming multinational often means higher profits and faster growth.
For employees, MNCs can create new job opportunities and even offer international training.
For customers, they bring a greater variety of products and sometimes better quality.
Governments benefit because MNCs pay taxes and contribute to the economy.
And local communities can benefit through job creation and development — although sometimes, they might face challenges like pollution or overcrowding.
Speaking of host countries — the places where these MNCs operate — there are several benefits they can enjoy.
First, job creation. When companies like Samsung open factories in countries like India, thousands of local workers are hired.
Second, there’s an increase in exports. The goods produced by these MNCs can be sold to other countries, improving the host nation’s economy.
Third, MNCs often help improve infrastructure, such as roads, power supply, and communication systems — which benefits everyone.
Fourth, they bring modern technology and skills. Local workers get trained, and new business techniques are introduced.
And lastly, they increase consumer choice. When Unilever entered African markets, for example, customers gained access to more hygiene and household products.
However, MNCs can also cause some problems for host countries.
Local businesses might struggle to compete with big international brands that have more money and better technology. For example, a local drink company might lose customers once Coca-Cola enters the market.
Another issue is profit repatriation — many MNCs send their profits back to their home country, meaning the host country doesn’t get to keep much of the income.
There can also be exploitation of workers and resources, especially in countries with weak labour laws. Some companies may pay low wages or ignore safety standards.
MNCs can also harm the environment, for instance, when mining companies cut down forests or pollute water sources.
Lastly, very large MNCs may influence government decisions to benefit themselves, sometimes at the expense of the public.
So, to wrap it all up —
Multinational companies are a huge part of today’s global economy. They bring growth, jobs, technology, and consumer choice, but they can also create challenges like exploitation and environmental harm. The key is balance — both governments and MNCs need to work together to ensure that business growth happens responsibly and benefits everyone.
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