Multinational corporations are becoming more popular in developing states. There are some advantages, such as creating a significant contribution to the economy and increasing the availability of jobs; however, the impact on small and medium enterprises and the lowering of the selling rate of local products can be its drawbacks.
The main advantage of these corporations is their significant contribution to the country’s economy. These companies uplift the foreign reserves of developing countries and boost development progress by inviting more foreign resources to invest. Moreover, numerous job opportunities are available since these corporations require more manpower, such as employees, and higher-level positions, such as managers and senior executive officers. For example, the Coca-Cola company in Sri Lanka has provided thousands of working opportunities for the local community.
On the other hand, the higher level of impact on small and medium enterprises is a vital drawback. It is because there is less accessibility to the resources that is hindered by these companies’ monopolies. Additionally, these small and medium enterprises are unable to compete with these bigger establishments. Furthermore, lowering the selling rates of local products is another impact of these companies. It is because of the higher production quality and its renowned band name. For example, King Coconut is Sri Lanka’s authentic drink, however, locals are more likely to consume flavored drinks than these healthy drinks.
In conclusion, although multinational companies are beneficial because of their contribution to the economy and the availability of job opportunities, their impact on small and medium enterprises and lower local production are the major drawbacks incorporated with these multinational companies.