4.4.3 Controlling MNC's

Question 1

What is the difference between influence and control?

2

Answer 1

• Stakeholder groups influence (pressure groups/customers)

- Control - major shareholders, appointed directors and government (laws/reg)

Question 2

Why may safety concerns contribute to the need of control over MNC’s?
2

Answer 2

• MN producing in countries w lax regulations = squeeze +life out unsafe machinery
• Local reg can’t ensure safe equipment for workers

Question 3

Why may short-term mineral extraction contribute to the need of control over MNC’s?
2

Answer 3

• Minerals extracted once, MN enters host country for minerals, country needs appropriate reward
• May bribe local politician to let MN in, reward not shared equitably in host country

Question 4

Why may weakening local cultures contribute to the need of control over MNC’s?
3

Answer 4

• MN adept to selling foreign products to locals (marketing budgets/tech)
• Consumers change habits lifestyles
• Loss of traditional local culture

Question 5

Why may lack of commitment to the host country contribute to the need of control over MNC’s?
2

Answer 5

• MN lacks strong bond to country

- MN may leave country, leaving unemployment or social problems

Question 6

What is lobbying?

1

Answer 6

• Process of directly trying to influence key political decision makers to act in favour of a business

Question 7

How are multinationals able to lobby?

1

Answer 7

• Money and power

Question 8

What may multinationals use lobbying to achieve?

3

Answer 8

• Licences to extract raw mats
• Encourage changes in law reg, cater to MN operation
• Overlooking where MN failed to adhere to regulations

Question 9

How can multinationals legally bypass the law in terms of takeover law?
2

Answer 9

• Takeover (dom countries), dealt by comp authorities in that country
• MN from 1 country could take over MN in another

Question 10

How can multinationals legally bypass the law in terms of tax law?
2

Answer 10

• MN use transfer pricing, between their diff operating countries
• Avoid tax in countries where corp tax is high

Question 11

Which type of economies is the issue of legal control more fundamental?
1

Answer 11

• Developing economies

Question 12

How can pressure groups influence multinationals?

2

Answer 12

• Influence governments to curb business actions

- Protest

Question 13

How is a pressure groups’ power limited?

1

Answer 13

• Can only influence not control actions of MN

Question 14

Why social media may impact on company behaviour?

2

Answer 14

• Media instantly shine light on events to audiences

- Bosses of MN aware of substitution, close attention to how they operate

Question 15

Why social media may have little impact on company behaviour?
2

Answer 15

• Issues disappear quickly and move onto next issue

- Company weather storm for a bit users move on

Question 16

What issues highlight the need to control MN’s?

4

Answer 16

• Safety concerns
• ST mineral extraction
• Weakening local cultures
• Lack of commitment to the host country