Question

Multinational Prices: Is It Sophisticated? Do they contribute to the ethics of the host country? , The ethics of these foreign companies and the extent of their commitment to the laws of other countries

Answer 1

The potential benefits of MNCs on host countries include:

* Provision of significant employment and training to the labor force in the host country.

* Transfer of skills and expertise

* Helping to developthe quality of the host labour force.

* MNC's add to the host country GDP through their spending, for eg with local suppliers and through capital investment

* Competition from MNC's acts as an incentive to domestic firms in the host country to iprove their competitiveness, perhaps by raising quality and or efficiency

* MNC's extend consumer and business choice in the host country

* Profitable MNC's are a source of significant tax revenues for the host economy

Potential drawbacks of MNC's on host countries include:

* Domestic businesses may not be able to compete with MNC's and some will fail

* MNC's may not feel that they need to meet the host country expectations for acting ethically and /or in a social responsible way

*MNC's may be accused of imposing their culture on the host country, perhaps at the expense of the richness of local culture. Might MNC's reduce cultural diversity around the world as they continue to expand, particularly into less developed or developing countries?

* Profits earned by MNCs may be remitted back to the MNC's base country rather than reinvested in the host economy.

* MNCs may make use of transfer pricing and other tax avoidance measures to significant reduce the profits on which they pay tax to the government in the host country

One of the main advantages to the host country is that MNCs boost their ecoomic growth. They bring with them huge investments and capital. And then through subsidiaries, joint ventures,branches, factories they promote rapid industrial growth.