Key Idea: When a business runs operations in more than one country, it changes the places it moves into as well as itself. This topic is what makes a business multinational, what it does to the host country, and how much it has to change to sell abroad.
What an MNC is
- A business with operations (shops, offices, factories) in more than one country.
- Exporting from home does not make it an MNC.
- Why go: new customers, lower costs, getting past tariffs, spreading risk.
Impact on the host country
- Benefits: jobs, skills, tax revenue, new technology, better infrastructure, exports.
- Drawbacks: profits sent home, local firms squeezed, low-skilled jobs, environmental and cultural harm.
- An MNC can also leave as quickly as it came.
Goods and services abroad
- Standardise: sell the same product everywhere, which is cheaper.
- Adapt: change it for local tastes, which sells better but costs more.
- Services depend on local staff and habits, so they usually need more adapting.
The words to know
| Word | Means | Do not confuse with |
|---|---|---|
| Multinational company (MNC) | a business with operations in more than one country | an exporter, which sells abroad but produces only at home |
| Home country | the country where the MNC has its headquarters | the host country |
| Host country | a country where an MNC sets up operations | any country it sells into |
| Repatriated profit | profit an MNC sends back from the host country to its home country | tax paid in the host country |
| Standardisation | selling the same product the same way in every country | adaptation, which changes the product for each market |
| Adaptation | changing a product or service to fit local tastes, laws or habits | a completely new product |
For a host-country question, sort the impacts into benefits and drawbacks, tie each to a detail in the case, then judge whether the country is better or worse off overall and on what condition. Always say who in the host country gains or loses: workers, local firms, the government, the environment.
Exam-style question
Goldcrust plc plans to build a factory in Seren, a city in Marovia, and to open 30 bakeries across the country. Explain one benefit and one drawback for Marovia of Goldcrust's plans.
Model answer plan
See the mark-by-mark plan — for / against / judgement, with marking guidance — in study mode.
Important: 'Goldcrust gets new customers' is a reason for going abroad, not an impact on Marovia. Every impact point must be about someone in the host country: its workers, its firms, its government or its environment.
Tap each card to check yourself.
Lena ships sourdough to a café abroad every week. Is her bakery an MNC? No. She is exporting. An MNC has operations, such as a shop or a factory, in another country.
Home or host: Goldcrust's headquarters country? Home country. Marovia, where it sets up bakeries, is the host country.
Name two benefits of an MNC for a host country. Any two: jobs, skills and training, tax revenue, new technology, better infrastructure, more exports.
Why can repatriated profit be a drawback for the host? Money made in the host country leaves it, so it is not spent or invested there.
Why are services harder to standardise than goods? A service is made when the customer is served, by local staff, and what counts as good service depends on local habits.
Standardise or adapt: which is cheaper? Standardise. One product and one campaign everywhere keep costs down; adapting sells better locally but costs more.
Exam tips
- An MNC has operations abroad; exporting alone is not enough.
- Host-country impacts are about the host: its workers, firms, government and environment.
- Balance every host-country answer: at least one benefit and one drawback, each tied to the case.
- Standardising saves cost; adapting wins local customers. Say which the case needs.
- Services usually need more adapting than goods, because local staff and habits shape them.