Q:

What are some disadvantages of multinational companies?

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Quick Answer

Some of the major disadvantages of multinational companies include the use of slave labor, may push local businesses out of the market, encourage too much expenditure on consumers, may pose a threat to the environment and may become a monopoly. These companies have the financial and resource power to achieve certain things within a short time which is why they also have these disadvantages.

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Full Answer

Since most governments have made it a point not to meddle in the business environment by putting too much regulations, some companies may take advantage of the situation to make abnormal profits by:

Using slave labor: this basically refers to paying workers an amount that is not reasonable. The fact that too many people are unemployed in a region may embolden a company to take advantage.

Local businesses: local businesses that lack the infrastructure and financial capability to carry out vigorous campaigns and distribution may quickly be pushed out of the market forcing them to shut down.

Environmental threat: unless a multinational company upholds ethical practices, it may carry out large operations with regards to production. This may easily cause environmental degradation.

Consumer expenditure: a multinational company can easily come up with offers or promotions that will ultimately cause consumers to use more money than they realize.

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