4.4.2 Ethics And MNCs

Question 1

what are ehtics

Answer 1

rules and principles that state which behaviours are acceptable in society

Question 2

what stakeholders have conflict with a business’ ethical decisions

Answer 2

• shareholders (could be ethical investors or want to prioritise maximising profit)
• suppliers (want to keep profits high)
• employees (want ethical treatment)
• managers (pressure to minimise costs)
• government (have to try and control MNC’s behaviour)
• communities (how are the MNC’s affecting the community)

Question 3

what is the profit vs ethics debate

Answer 3

• shareholders want to maximise profits and being ethical can come at an increased cost
• HOWEVER being ethical can increase demand, create customer loyalty, increase employee motivation and add value

Question 4

why might MNCs act unethically in developing countries

Answer 4

• in low economically developed countries there are often lower pay rates and poor working conditions due to a lack of legislation and law enforcement
• this provides lower costs and increased profits for MNC’a

Question 5

what is the global supply chain

Answer 5

all the processes and people around the world involved in making a product or providing a service

Question 6

what is child labour

Answer 6

• when children work in jobs that have harmful effects on their well-being and development

Question 7

Evaluate an MNC using child labour

Answer 7

+ provides lower costs for the MNC’s
- consumers may boycott and refuse to buy products HOWEVER this is less likely to happen if the business is B2B
+ in some places child labour is necessary and acceptable for families to have a sufficient income
+ governments of the host country ignore labour exploitation as they want to attract MNC’s to provide FDI
+ some would argue the low pay is proportional to the low costs of living in developing nations

Question 8

what are the three main ethical concerns from MNC behaviour

Answer 8

• labour exploitation
• environmental considerations
• marketing

Question 9

MNC’s are often less considerate of the environment in developing nations. What is the reason for this ?

Answer 9

• more developed nations will have legislation on an MNC’s emissions and waste disposal
• developing nations don’t have the legislation in place and MNC’s take advantage of that

Question 10

what is the global supply chain?

Answer 10

all the processes and people around the world involved in making a product or providing a service
- often child labour may occur in the global supply chain
- it is an ethical question as to who is responsible if child labour is being exploited within the chain but not directly by the business