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Illustrate the reasons why multinational companies (MNCs) locate in Ireland. - Leaving Cert Business - Question 2B - 2015
Question 2B
Illustrate the reasons why multinational companies (MNCs) locate in Ireland.
Worked Solution & Example Answer:Illustrate the reasons why multinational companies (MNCs) locate in Ireland. - Leaving Cert Business - Question 2B - 2015
Step 1
Access to the EU Market
Answer
Ireland is a member of the European Union, providing MNCs free access to the EU market. By establishing operations in Ireland, companies can manufacture and distribute goods within the EU without the burden of paying tariffs or taxes. For example, pharmaceutical firms like Pfizer can produce goods in Ireland and distribute them to EU ports such as Antwerp in Belgium, facilitating smoother trade.
Step 2
Well-educated workforce
Answer
The Irish workforce is notably educated, with most workers having at least a minimum of secondary education. Many hold degrees in various fields, enabling MNCs to access skilled labor needed to produce their products and services. Companies like Microsoft and other tech firms benefit from the high quality of graduates in fields such as IT, business, and engineering.
Step 3
Low Corporation Tax
Answer
Ireland's corporation tax rate of 12.5% is among the lowest in the world, making it an attractive location for MNCs looking to minimize their tax liabilities. By locating their operations in Ireland, companies such as Apple can effectively manage their profits while reducing their overall tax burden.
Step 4
English-speaking nation
Answer
Being the only English-speaking country in the EU, Ireland offers a distinct advantage for MNCs originating from the USA. The ability to conduct business in a familiar language simplifies operations and communicates effectively with local staff, enhancing operational efficiency.
Step 5
Green Image
Answer
Ireland has cultivated an image as a 'clean green' country, which appeals to MNCs looking to bolster their environmental credentials. This perception makes it easier for these companies to market their products as environmentally friendly, thus enhancing their global reputation.
Step 6
Government Incentives
Answer
The Irish government offers various incentives to attract MNCs, including grants and tax rebates. For example, through the Industrial Development Authority (IDA), MNCs can receive support for establishing operations in Ireland. This assistance helps companies, such as eBay and Dell, streamline their setup processes and reduce initial costs.