4.4 Global Industries And MNC’s

Question 1

What are the advantages of MNCS on employment,wages and working conditions?

Answer 1

• Job creation
• Offer more competitive wages
• Offer better working conditions

Question 2

What are the advantages of MNCS for local businesses?

Answer 2

• Boost the local community by creating opportunity for local businesses - higher wages - spend more
• Potential fort joint ventures

Question 3

What are the advantages of MNCS for local communities and the environment?

Answer 3

• Benefit from job opportunities
• MNC’s often invest to improve infrastructure
• MNC’s pay tax to local councils
• MNC’s can establish charitable initiatives that have a positive impact on the community

Question 4

What are the disadvantages of MNCS on employment,wages and working conditions?

Answer 4

• May exploit local workers
• Tend to pay relatively lower wages
• MNCS may not create jobs but relocate workers into the country

Question 5

What are the disadvantages of MNCS for local businesses?

Answer 5

• reduce the supply of workers
• able to produce at a lower cost

Question 6

What are the disadvantages of MNCS to local communities and environment?

Answer 6

• MNCS may cause damage to local environment
• MNCS may leave unsightly production facilities behind after they’ve extracted all the resources

Question 7

What is the impact of MNC’s to the national economy?

Answer 7

• FDI flows
• Consumers have a wider choice of goods
• Business culture
• Tax revenue and transfer pricing
• Technology and skills transfer
• Balance of payments

Question 8

What are the advantages of FDI flows?

Answer 8

• Initial lump sum of money that enters the country to pay for the investment
• Enriches local firms or citizens

Question 9

What are the disadvantages of FDI flows?

Answer 9

• assets from the home country are now owned by foreign business’s
• Local firms who sold the asset may not reinvest the money into the local economy

Question 10

What are the advantages of MNC’s on business culture?

Answer 10

• Domestic businesses may be influenced by business culture of MNC’s
• MNC’s may also encourage a culture of entrepreneurship

Question 11

What are the disadvantages of MNCS on a business culture?

Answer 11

• MNC’s may demonstrate unethical behaviour

Question 12

What are business ethics?

Answer 12

Business ethics refers to the principles and norms that govern business behaviour