Cost-effectiveness: Multi-national companies in the eurozone can be cost-effective as they have access to raw materials from within the European Union.
The large size of the market: Large size of the market has a deep impact on the overall profitability of the organization. Companies that operate in the eurozone can tap the high-income consumers with their product.
Currency risk is hedged: Multinational companies that function in the eurozone are hedged against currency risk exposure of the Euro if they were not operating in the Euro Zone.
Cons of Multinational Corporations
Local businesses lose out: Large multinational company that has operations in the eurozone can hamper the local business and can affect the livelihood of people.
Exploitation for profits and market share: Large organization can go to extreme lengths to generate profits and gain market share.
Monopoly in business: The large organization can stifle competitors and gain market share to become a monopoly which is not good for the market.
This following news article clearly suggests the pros of having multinationals, that generated 2.2 billion euro in taxes for the government of Ireland which helped it cover deficits and health care spending (Chance, 2019).The US multinationals that operate within Ireland have been able to take advantage of the market scenario which has resulted in employment generation, economic growth and collecting record taxes from multinationals.
Sample Solution
Pros:
- Increased competition: Multinational corporations can help to increase competition in the eurozone, which can lead to lower prices and better quality products for consumers.
- Job creation: Multinational corporations can create jobs in the eurozone, both directly and indirectly.
- Technology transfer: Multinational corporations can transfer technology to the eurozone, which can help to boost innovation and economic growth.
- Foreign direct investment: Multinational corporations can bring foreign direct investment (FDI) into the eurozone, which can help to boost economic growth.
Cons:
- Tax avoidance: Multinational corporations can use complex tax structures to avoid paying taxes in the eurozone.
- Environmental damage: Multinational corporations can sometimes cause environmental damage in the eurozone.
- Exploitation of workers: Multinational corporations can sometimes exploit workers in the eurozone, paying them low wages and working them long hours in poor conditions.
- Loss of local control: Multinational corporations can sometimes have a negative impact on local culture and businesses, as they can become too powerful and influential.
Overall, the impact of multinational corporations in the eurozone can be both positive and negative. It is important to weigh the pros and cons carefully before making a judgment about whether or not they are beneficial to the region.
The news article you cited provides an example of the positive impact that multinational corporations can have on the eurozone. However, it is important to note that not all multinational corporations are created equal. Some are more likely to engage in tax avoidance, environmental damage, and worker exploitation than others. It is important to do your research before deciding whether or not a particular multinational corporation is a good fit for the eurozone.