A potential drawback for the host country when a multinational operates there is

A potential drawback for the host country when a multinational operates there is

• A. Improved infrastructure
• B. Competition with domestic firms
• C. Local firms losing customers abroad
• D. Lower regulatory burden

Answer: (B)

Bringing in a multinational often shakes up the market because the local firms have to face a much stronger and better-resourced rival. The key drawback for the host country is that domestic businesses can struggle to compete with a large multinational that benefits from economies of scale, advanced technology, and access to global networks. This can lead to local firms losing market share, closures, and potential unemployment, which is a real downside for the local economy even though the country may gain jobs and investment overall. Improved infrastructure, for example, is typically a benefit that comes with foreign investment, not a drawback. The issue of local firms losing customers abroad affects those firms rather than the host country directly. A lower regulatory burden is generally seen as an attraction for investment, not a drawback.

Bringing in a multinational often shakes up the market because the local firms have to face a much stronger and better-resourced rival. The key drawback for the host country is that domestic businesses can struggle to compete with a large multinational that benefits from economies of scale, advanced technology, and access to global networks. This can lead to local firms losing market share, closures, and potential unemployment, which is a real downside for the local economy even though the country may gain jobs and investment overall.

Improved infrastructure, for example, is typically a benefit that comes with foreign investment, not a drawback. The issue of local firms losing customers abroad affects those firms rather than the host country directly. A lower regulatory burden is generally seen as an attraction for investment, not a drawback.