4.4 Global Industries and Economies Flashcards
how do MNCs impact local labour and job creation? (negative and positive)
they create many jobs for the local community and provide good benefits
however, they could take employment away from local competitors and smaller businesses
how do MNCs impact wages and working conditions?
when a big new business opens, it can drive up wages in the locality as the demand for workers rises
the MNCs would also often provide favourable working conditions as they have a more modern approach to business development
how do MNCs impact local businesses? (positive)
they have a positive impact as the local businesses like builders, electricians etc will help out when building the new plant
when they employ people within the area, it will increase their income, which would increase spending in local businesses
how do MNCs impact local businesses? (negative)
MNCs would lure workers away from local businesses by offering better wages and working conditions, therefore local businesses would struggle to compete and are often forced out the business
how do MNCs impact the local community and environment?
- they improve infrastructure through investment in roads etc
- contributions to local government taxes
- participation in local cultural or sporting events and donating to local charities
impact of MNCs on the national economy: FDI flows
- the money spent on establishing a facility is seen as FDI: flows of FDI results in higher GDP : higher economic growth
- local tax on MNCs can be used for government spending on things like healthcare or education
- increase in employment
impact of MNCs on the national economy: balance of payments
the flow of FDI will improve the balance of payments as money will flow into the nations account
impact of MNCs on the national economy: technology and skills transfer
MNCs would often introduce new technologies and modern practices into the host nation
impact of MNCs on the national economy: consumers
- more choice
- lower prices: competitive
- improved quality: MNCs use high tech equipment
- better living standards: employment opportunities and higher incomes
impact of MNCs on the national economy: business culture
sometimes, MNCs can lead to people who are employed to leaving their jobs and starting their own businesses, as they could encourage them to become suppliers
impact of MNCs on the national economy: tax revenues and transfer pricing
MNCs will try to avoid as much tax as possible, so they will try to operate in low tax countries in order to maximise profits
define stakeholder
an individual/group that takes an interest and is affected by an organisation
2 stakeholder issues: consumers
- product safety
- misleading advertising
3 stakeholder issues: employees
- employee safety
- employee redundancies
- pay and working conditions
stakeholder issue: shareholders
- ST vs LT return on shares, they focus on seeking a return on their investment through dividends
stakeholder issue: countries/communities
- environmental concerns like if the business’ activities are polluting or damaging the environment
the importance of good pay and working conditions
in order for a business to be ethical, they must offer good pay and good working conditions of employees and they must ensure that employees are not exposed to dangerous conditions like chemicals or poor ventilation, like in sweatshops
environmental considerations : emissions
a business would need to reduce the amount of emissions they create
environmental issues: waste disposal
a business needs to ensure they have the right infrastructure to allow for efficient waste removal, like having good roads
supply chain considerations: exploitation of labour and child labour
businesses are taking steps to keep products free from exploited labour and child labour
marketing considerations: misleading labelling
the label on the product cannot be misleading and must be true to price, quantity and size of the product
marketing considerations: inappropriate promotional activities
they need to ensure that the advertising used is appropriate and not offensive/illegal as it can ruin the brands rep
political influence on MNCs
- tariffs, quotas and requirements can be used to protect domestic businesses from international competitors
benefit and drawback of using political influence to control MNCs
(+) helps elected officials challenge the power of private businesses and address concern
(-) facilitates corruption
what is competition policy
government policy that promotes competition and ensure firms don’t abuse their market power
how can laws be used to control MNCs?
If a country introduces laws to reduce pollution or protect children from child labour then this will all cost the MNC money to improve their practices e.g. reduce pollution
This means the MNC may simply move production to a country where there are less laws and restrictions
how can pressure groups control MNCs?
Pressure groups are organisations which campaign for changes in the law or new legislation in specific areas.
As such, they can have a strong influence on public opinion and behaviour of MNC if they want to avoid a PR disaster.
how can social media control MNCs?
social media can raise awareness to an issue quickly, and there have been arranged boycotts on social media before
