Key Idea: At HL, Topic 1.6 is about multinational companies and the complex impact of global expansion. Students must explain why businesses become multinational, analyse the challenges of operating across countries, and evaluate the effects on host countries, home countries and the business itself.
🌐 Why businesses become multinational: Access larger markets. Reduce labour or production costs. Avoid tariffs and trade barriers. Spread risk across countries. Access resources, skills and technology.
⚠️ Challenges of global operations: Different legal systems. Cultural and language barriers. Exchange rate risk. Time zone and coordination problems. Ethical and reputational pressure.
🏗️ Potential host-country benefits: Job creation. Investment. Technology transfer. Skills development. Tax revenue.
🌍 Potential host-country risks: Profit repatriation. Labour exploitation. Environmental damage. Pressure on local firms. Dependence on one major employer.
HL answers improve when students explain the mechanism of impact. For example, do not just say an MNC creates jobs — explain how investment in factories, supply chains or training creates employment and skills transfer.
In evaluative answers, compare economic benefit vs ethical concern. This balance is often what pushes a response into higher bands.
Important: Common HL trap: assuming multinational expansion is automatically positive because it increases size. Examiners reward answers that also discuss regulation, labour standards, environment and reputation.
- Identify whether the question is about reasons, challenges or impacts
- Use the correct multinational terminology
- Apply the point to the case or country
- Explain the business effect clearly
- Balance benefits and drawbacks
- Conclude with judgement if the question is evaluative