4.4.3 Controlling MNCs Flashcards
4 ways governments can control MNCs
- legal control
- political influence
- pressure groups
- social media
what is legal control
- regulations, laws and policies
what are competition policies
- exists to promote competition and ensure that markets run as efficiently as possible
- dominant firms cannot use strategies to drive out competition
what is a taxation policy
- policies about the amount of tax businesses must pay when they operate in a country
e.g. Ireland have a policy of low corporation tax to attract FDI
what are the benefits of legal control
+ used to improve competition and innovation through competition policies
+ quick to enforce and our binding with fines
+ facilitates consumer protection
what are the drawbacks of legal control?
- there is a lack in consistency in laws so MNCs will find the most friendly legal environment
- MNCs have great power
- MNCs become “footloose” and move to more favourable locations
- facilities corruption
- laws are often not easy to enforce
what is political influence
- governments applying pressure for MNCs to make changes
- state-owned businesses can be easily controlled by the government and can give the government a chance to control the behaviour of other MNCs in the market
benefits of political influence
- this pressure applied by the government makes MNCs conscious of approval from their host nation to make operations smoother
drawbacks of political influence
- politicians can be bribed
- MNCs may have more power than the government due to the benefits the MNC brings to the country so unethical behaviour may be ignored
what are pressure groups
- groups of people who want change in government policies or business behaviour
- methods like naming and shaming and sit-ins and strikes are often used
benefits of pressure groups
+ with the use of social media activists gain quick traction
+ committed volunteers
+ raises issues to public, authorities and politicians
drawbacks of pressure groups
- direct action (strikes and protests etc.) can lead to violence or negative image of the pressure group
-MNCs status and brand may over power the pressure group - information can go “viral” and not be long lasting
what is social media
the interaction of people over websites and applications that allow people to share and create content
benefits of social media
- information can be widespread quickly which gives the public power
drawbacks of social media
- when something goes “viral” it becomes harder to control the intended message
