What Are The Disadvantages Of Multinational Companies?

When multinational companies locate in the host countries they might cause the small firms of that country to go out from the business. They may drive away the small firms. They may even cause negative externalities such as pollution, congestion, destruction of natural and historical sites in the country, unemployment of locals and sometimes it may even lead to global warming. The MNC may also waste the country's resources by over production of goods. This may even cause problems in the country for future development.The MNC may move their factories to another country causing a lot of unemployment amongst the local people and closure of small firms who were depending on the MNC.MNC can force local firms out of business as they cannot compete against the MNC. The MNC will develop roads and other buildings which will cause traffic congestion, noise and air pollution which may cause the people living around the area to have problems.   

If multinational companies provide employment, infrastructure development and growth in economies, then on the other hand, there are various disadvantages of multinational companies. Firstly, multinational companies can severely impact the local industries because it increases the competition in the economy. Secondly, multinational companies can negatively impact the culture of the economy. Thirdly, because of the trade restrictions the multinational companies can face various problems. The availability of resources are limited in an economy and when multinational companies are opened then resources can get scarce. Moreover, though a company can grow because of investments brought by multinational companies but still the economies can grow more if the local investors make these investments.

The problems of Multinational Companies are;

• Language

Of course, this part is so important, how could multinational companies expand their market if those companies don't able local languages.

• Culture

This aspect is must be considered by multinational companies because when they want to advertise the products to local, they must thing what they can do and what they can't do. Actually, not just in advertising aspect, but also employment.

• Geography

Multinational companies must consider this thing because it is impossible if those companies build their branch offices at jungle or mountain. Who will buy their product or services?

• Transportation

To avoid high cost on product distribution, I think this aspect is must be considered by multinational companies. I never heard there are multinational companies build their offices in Jungle.
Well, I think that's all I can answer about this issue, I hope it can help you.

To Your Better Life Journey

Agus Sutanto