Multinational companies are becoming increasingly common in developing countries. What are the advantages and disadvantages of this?
More and more transnational corporations are setting up branches and factories in less developed nations. This essay will first suggest that reduced labour costs is the primary benefit for these companies, while bad publicity because of Human Rights abuses is the main drawback.
The main reason multinationals set up shop in poorer countries is because it is much cheaper for them to get their goods manufactured there, due to comparatively lower salaries. In an ever more competitive marketplace it is simply unsustainable for most companies to pay Western wages when they can pay someone a fraction of the cost to do the same job. For example, the only reason an iPad or iPhone can be sold for less than $499 is because a worker in China can assemble the unit for approximately one tenth what an American would expect to be paid.
Despite this economic benefit, Apple has recently come under scrutiny because of appalling conditions in many of its Asian factories. Workers in their Foxconn plant in China had to work under such grim circumstances, including 15 hour shifts, pressure to meet unrealistic quotas and low wages, that several of them committed suicide by leaping off the factory roof. The New York Times reported that this resulted in a 12% drop in the sale of Apple products, especially after it was reported that Apple had installed nets to stop any employees killing themselves in the future.
In conclusion, huge global companies may reap the rewards of low operating costs in developing countries, but they should also keep in mind that they have a responsibility towards their workers and any infringements of their rights could negatively affect their image and stock price.
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