Australian Matriculation

APPENDIX 1

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AUSTRALIAN MATRICULATION

ECONOMICS 3A/3B

ASSIGNMENT 1

Prepared by

NAME:Anabel Ling Yi Wy

INTAKE: January

GROUP: 5

Deadline

26th March 2015

APPENDIX 2

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Case study Part 1

1. Multinational Corporations are very large company with headquarters in a country and it is subsidiaries are in one or more countries. For example, large retail companies like H&M and Marks & Spencer.
2. The Australian local retails may struggle or face challenges and increase their competition due to the incoming of international companies in the local market. As an example, local Australian retails need compete in terms of fashion, price or service with the international companies. Other than that, Australian local retailers may experience that their share market may be lowered because of the interference of multinational companies. For example, some customers may prefer to shop in the non-local retail stores, so number of customers in local retail stores may reduce.
3. When multinational corporations are in host countries, they will move their profits back to their headquarters, so host countries made lesser than they suppose to, which increases the outflow of cash in the host country.The country’s gross domestic production (GDP) is lowered, so the overall government tax revenue is decreased, lowering the economical welfare of the country. Other than economically,  the impact made by multinational companies in Australia markets may change the taste of local consumers, so consumers will be willing to try out new things, so locals may need to change their design of their products in order to keep up with the trend.
4. Since in the Australian retail markets, there will be new entrants, they also need new labors in the process of their expansion, so there is more job opportunities created. It is also a benefit gain from the multinational corporations since the government will gain higher tax revenue from these new entrants since they are not from the local, which they usually pay a higher tax in order to operate in the country. Then, multinational companies will require to either partner or setting up their companies in the local market, showing that the rate of flow in Foreign Direct Investment (FDI) will increase.