Entry of MNCs in a domestic market may prove harmful for small-scale producers who are not able to compete with them. MNCs buy up local companies. The most common route for MNCs investments is to buy up local companies and then to expand production.
MNCs with huge wealth can quite easily do so. The large MNCs have tremendous power to determine price, quality and labour conditions for the small producers of other countries.
The small industries in India employ the largest number of workers in the country next only to agriculture. Several of these units have shut down due to tough competition by MNCs. As a result, many workers became jobless. These days most employers prefers to employ workers flexibly.
So, the workers’ jobs are no longer secure.
Thus, it can be concluded that MNCs often opt for foreign collaberations to expand and diversify.