Question

Discuss the advantages and disadvantages of a multinational company operating in a developing third world country. Do you think the advantages outweigh the disadvantages, or do you believe the opposite is true? Why?

Answer 1

Multinational companies operating in third world countries have various advantages and disadvantages which are caused due to the nature and the economy of businesses that are present there. Usually, developing economies/third world countries have an abundance of cheap labour and resources for the organization to make use of, while also having lesser government restrictions as well as support from the government to support their own growth. It also has several disadvantages if we take into account factors such as healthy market competition, low spending power, income gap, poor working conditions as well as disadvantages in terms of unskilled labour and technological deficiency which can cause a factor of deficiency for the organization in general and therefore, act as a disadvantage.

We can clearly say that the advantages outweigh the disadvantages due to the fact that abundance of cheap labour and resources because, all the other factors can be converted to become advantageous for the organization in the long term. Technology can be developed, labour can be trained as well as a change in the market competition can cause a rise in economy and increase the spending power of the population as well.