Question

One of the other things that I would like you to think about for this week is how we can set up our laws to make sure that single individuals, such as the McDonald coffee lady, can legally compete with huge corporations. What about the regulatory schemes that you have learned about in the reading do you agree with, what don't you agree with?

In terms of large companies and environmental impacts, how can local residents again compete with huge corporations? Why do we need to regulate the environmental impacts that business has on us all?

Answer 1

McDonald’s is a giant multinational. It has operations in over 100 different countries employing around 1.8 million people globally. It has huge assets and turnover. For example, it turned over US$6620 million in 2015.

McDonald’s, like all multinationals, has access to a much wider market than companies that focus entirely on domestic markets. McDonald’s has around 34,000 outlets around the world and in over 100 countries; even in India, where most people do not eat beef or pork, there are about 180 restaurants.

When a multinational like McDonald’s locates operations in a foreign country, that country and its economy is likely to enjoy a number of benefits. These include an increase in income and employment. Multinationals create new jobs in developing countries.The extra Output and employment generated by multinationals such as McDonald’s will increase economic growth and raise living standards for people in these countries.

Another benefit they might provide is income for the government. This is because the profits made by multinationals are taxed by the host nation. This increases tax revenue for the government in that country and this can be used to improve government services such as health care, roads and other infrastructure.

In some cases, multinationals provide training and work experience for workers in less developed countries. Also, governments in less developed countries often spend more on education to help attract multinationals.

The arrival of multinationals like McDonald’s has encouraged more people to set up businesses in some countries. Multinationals may provide the skills and motivation needed for enterprise. For example, a new multinational may encourage locals to supply services such as transport, accommodation, maintenance, cleaning and leisure activities.

However, despite the benefits outlined above, multinationals are sometimes criticised for their behaviour.

For example, many environmentalists are suspicious of multinationals because they may cause environmental damage. One reason is because multinationals are heavily involved in the extraction industries, such as coal, oil and gold mining.

Multinationals are sometimes accused of exploitation. For example, they may pay locals low wages. There is some evidence in this case of such alleged exploitation. Recently, McDonald’s has been attacked for paying its workers low wages.

Another possible disadvantage of attracting multinationals is that the profits made by multinationals abroad are often repatriated. This means that profits are returned to the country where the multinational is based. As a result the host country loses out.

To conclude, many would argue that in the case of McDonald’s, the benefits of multinationals are greater than the disadvantages. Higher incomes, new jobs and rising tax revenues are an attractive proposition for many countries,particularly developing countries. Provided the activities of multinationals are monitored, it may be possible to minimise the disadvantages such as environmental damage and exploitation.