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Business Studies IGCSEPDF 194
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7. Multinational Companies (MNCs)
Definition:
A multinational company (MNC) is a business that has operations (production or
services) in more than one country.
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Also called transnational corporations (TNCs).
Examples: Shell, McDonald’s, Toyota, Unilever, Coca-Cola.
Employment Opportunities: MNCs create new jobs and reduce local
unemployment. (For example, McDonald's, Tim Hortons, and other international
fast food chains, which are not Pakistani companies [they are MNCs], operate in
Pakistan, creating jobs and reducing unemployment.)
Higher GDP: Increased production raises national output.
Lower Production Costs – Access to cheaper labour and raw materials.
Access to Natural Resources – Extract materials that aren’t available in the home
country (e.g., oil, copper).
Proximity to Markets – Reduce transport costs and respond quickly to local
demand.
Avoid Trade Barriers – By producing inside a country, firms avoid import tariffs
and quotas.
Diversification of Risk – Operating in multiple markets spreads business risk.
Competitive Advantage – Keep pace with global competitors and strengthen brand
power.
Advantages for the Host Country
Why Firms Become Multinationals