4.4 Global industries

Question 1

What is a multinational?

Answer 1

• a business that is registered in one country but has manufacturing operations in different countries

Question 2

Advantages of Multinationals on employment/working conditions

Answer 2

• Create jobs
• May offer more competitive wages
• May offer better working conditions

Question 3

Disadvantages of Multinationals on employment/working conditions

Answer 3

• May exploit workers
• May not create jobs if they bring workers from their own countries
• Often move to countries with lower wages/production costs

Question 4

Advantages of Multinationals on local businesses

Answer 4

• Can boost the local economy (higher wages, more being spent)
• Locals can develop new skills and gain new knowledge

Question 5

Disadvantages of Multinationals on local businesses

Answer 5

• Reduce the supply of workers if they offer better pay
• local businesses may loose customers as they are competing with a large business

Question 6

Advantages of Multinationals on the environment

Answer 6

• Often improve infrastructure
• May have to pay taxes which will be re invested into the local communities

Question 7

Disadvantages of Multinationals on the environment

Answer 7

• Cause damage to habitats/environment eg. oil pollution
• Might leave unsightly production facilities behind

Question 8

Advantages of FDI

Answer 8

• initial lump sum of money to pay for the investment
• Can be used to develop local firms or citizens who now have more money available to spend in the economy
• money is reinvested back into the local economy leads to new jobs and boosted economic growth

Question 9

Disadvantages of FDI

Answer 9

• Assets from the home country are now owned by foreign businesses
• The local firms or individuals who have sold the asset, may not reinvest the money into the local economy but may move it abroad

Question 10

How do MNC’S Improve the balance of payments?

Answer 10

• MNC’s can improve this by bringing FDI into a country
• Any goods and services exported for sale will generate inflows to the country’s balance of payments

Question 11

How do MNC’S have a negative impact of the balance of payments?

Answer 11

• If the MNC buys raw materials or equipment abroad, there is a flow of money out of the country
• If the MNC send profits back to their home country, a flow of money out of the country

Question 12

How can you control an MNC?

Answer 12

• Pressure groups
• Legal control
• Political influence
• Social media

Question 13

Pressure groups

Answer 13

• Organisations that operate to influence company for a particular cause
• Lobbying (taking issues directly to the gorvernment)
• Protests/strikes
• boycotting

Question 14

Social media

Answer 14

• high levels of exposure for MNC’s to promote their brand or the public to share information on unethical behaviors
• MNC’s have to address it online
• However social media may be limited/monitored in those countries

Question 15

Legal control

Answer 15

• Governments can enforce legislation/ regulation to control the operations of MNCs
• Governments want to attract MNCs to boost their economy, create legal control in areas eg. tax, unemployment ensures stability for the MNC

Question 16

Political influence

Answer 16

• MNCs in developing countries can influence governments as they may establish deals which are beneficial to politicians
• When MNCs establish themselves in a new country, they must work within the rules and regulations of that country