4.4 Global industries and companies (MNCs) Flashcards
what is business ethics?
the principles and norms that govern business behaviour. usually accepted by society, individuals or groups
what are some ethical considerations?
- stakeholder conflicts
- environmental considerations
- supply chain considerations
- marketing considerations
- pay and working conditions
what are the environmental considerations?
- waste disposal: MNCs tend to locate in LEDCs to achieve lower costs of disposal, LEDCs have less developed infrastructure to deal with wastage and therefore less regulations = unsafe disposal and environmentally aware consumers put pressure on MNCs to act ethically
- emissions: LEDCs have less strict legislation on emissions causing MNCs to produce there to avoid high costs of emission taxes
what are the stakeholder conflicts associated with ethics?
- management V workers: management may be more concerned with reducing costs than on worker safety
- management V shareholders: shareholders want to maximise profits rather than fair pay for employees to retain them
what are the supply chain considerations associated with ethics?
- MNCs tend to locate in LEDCs to exploit workers: get a lower wage cost, poor sanitation/working conditions, longer hours.
- child labour: children are less aware of their rights therefore have low wages and long hours.
- firms can hide their records and change birthdates so its difficult to assess whether they are using child labour
what are the marketing considerations associated with ethics?
- misleading labelling: cant spread false information to generate higher sales e.g. size of product, content, features, function.
- inappropriate promotional activities: should not be offensive or illegal, adapted to culture eg gift giving in japan but not cultures where it seems like bribery
what are the factors to consider when controlling MNCs?
- political influence
- legal control
- pressure groups
- social media
what is an MNC?
it trades or manufacturers in more than one country. it may also be known as a transnational or MNE
what is political influence?
governments use policies to try and persuade MNCs to make particular decisions. for example govts may offer subsidies to attracts MNCs to their countries
benefits of political influence?
- gaining political approval
- may find trading smoother and less troublesome
drawbacks of political influences?
- corruption
- some MNCs bring wealth that they may be allowed to be unethical
what is legal control?
if a country introduces laws eg for child labour/pollution it may increase the ost of labour
benefits of legal control?
- laws allow consumers to have some rights
- laws can be passed at any point
- allows workers to have rights
- protects brand image
drawbacks of legal control?
- MNC may move production to a country where there are less regulations
- host nation doesn’t want to lose economic input of the MNC so this deters laws being passed
- MNCs can afford expensive legal defence
what are pressure groups?
organisations that campaign for changes in the law or new legislation in specific areas
benefits of pressure groups?
- raise public awareness
- quickly alert large number of consumers through social media
- can create PR problems for MNCs
drawbacks of pressure groups?
- needs to be a large organised group
- size and wealth of MNCs mean they can easily counter or quieten pressure group activity
what is social media?
- social platform can influence public opinion and put pressure on MNCs
benefits of social media?
- powerful way of influencing
drawbacks of social media?
- only short term as it is a dynamic medium
- customers can easily be bored
