4.4 Flashcards
(36 cards)
Why are impacts of MNC’s?
- increases an economys GDP
- dilutes the culture
- improves the skill of workers
- negative environmental impact
- low wages
- improves infrastructure and communication
What is an MNC?
a multinational company, a business which operates in more than one country
What are advantages of MNC’s on a local economy?
- creates employment
- increases skills base
- increases standard of living
- raises a countrys profile
- improves balance of payments
- improves infrastructure
what are disadvantages of MNC’s on a local economy?
- profit leakage
- low paid jobs
- pull out quickly
- poor safety records
- increases urbanisation
- widens poverty gap
What are the impacts of MNC and FDI flows?
-tends to be a significant investment
-governments will incentivise businesses to move there by giving granta or tax breaks
this lowers the costs of production which increases profit incentive
What do MNC and FDI flows depend on?
- size of the incentive
- the risk of moving (assessment of a country as a production location or market)
What impact does MNC’s have on the balance of payments?
the MNC brings capital to the country whilst also bring export promotion and import substitution
What impact does MNC’s have on technology and skills transfer?
- Mnc’s bring efficient production methods that can be learned
- workers can be trained by MNC’s and then can share the ideas with domestic firms so they are able to see the benefits of new technology and productive systems.
What impact does MNC’s have on consumers?
- local population gains more choice
- benefit from low prices as there may be more substitutes or they dont have to pay an import tariff
what im pact does MNC’s have on business culture?
-large numbers of foreign businesses can dilute the culture, customs of traditions within an area.
What impact does MNC’s have on tax revenue and trasfer pricing?
- developing countries are not gaining the full tax revenue due to profit leakages
- developing countries may lower their taxes to attract businesses
What is ethics?
having moral priciples that govern how a company does business.
what do owners want as stakeholders?
- high profits mean they can give good dividends to shareholders
- enhances job security if theys are able to please the board
- likely to see employees as a cost depending on the business objectives
what do customers want as stakeholders?
- low prices and high quality
- ethical products
- this increases costs which reduces the profits for a business, meaning there is a stakeholder conflict
what do managers want as stakeholders?
- promotion and prospect
- bonuses on high profits
what do employees want as stakholders?
- job security
- good working conditions
- fair pay
what do the government want as stakeholders?
-want tax revenue from corporation tax
however this hits into business profits
-lawful and ethical practices
what do suppliers want as stakeholders?
-charge high prices while keeping costs of production low
what are the effcts of MNC’s on pay and working conditions?
- pay and cost of living varies across the world
- MNC’s exploit local workers as they dont pay fair wages that locals can live off
- this is beneficial for owners who want low cost high profit-not for employees
- working conditions in poorer nations tend to be below developed economies
- owners wanting high profits may cut costs in health and safety training and procedures
What are the effects of MNC’s on emissions?
- the 21st century climate crisis is mainly from 90 businesses
- create massive emissions from producing products
what are the effects of MNC’s on waste disposal?
- MNC’s regularly ignore the weak environmental laws in developing countries
- waste disposal can be expensive and owners want to lower costs
what is a supply chain?
a system of businesses, people, activities, information and resources involved in moving a product or sevice from supplier to consumer.
what can be problems with supply chains?
- having a part of the supply chain in a developing country can be a problem for MNC’s
- this is because may garment factories outsource to slums, refugee camps and unlicencses back street businesses
- forced labour
- child labour
what is forced labour?
- threats or actual physical harm to the worker
- restriction of movement or confinement to the workplace
- withholding wages or excessive wage reductions
- retention of identity documents
