4.4.3 Controlling MNCs Flashcards
What are the 4 methods of controlling MNCs?
1.) Political influence
2.) Legal control
3.) Pressure groups
4.) Social media
How can political influence be used to control MNC activity?
-Governments can apply pressure to attempt to change the behaviour of MNCs.
-For example MNCs have been avoiding paying tax in the UK; Starbucks, Google, Amazon.
-Since 2012 when the UK chancellor put tax avoidance on the G20 agenda, the UK has helped reform international tax rules.
What are the benefits of using political influence to control MNC activity?
-MNCs ,ah wish to get political approval from the governments of the host nations, which may help trade + setting up.
-Political approval = smoother trading.
What are the drawbacks of using political influence to control MNC activity?
-Politicians can be bribed.
-Some MNCs bring so much wealth + employment to an economy that a weaker government might ignore unethical activities (Brazil, Nigeria, Mali)
How can legal controls be used to control MNC activity?
-If a country introduces laws to reduce pollution / protect children from child labour then this will cost the MNC money to improve practices.
-However, quite often the MNC may ignore/flout these regulations.
What are the benefits of using legal control to control MNC activity?
-Laws can be passed at any point to control the actions of a MNC which are already established in a country.
-Laws mean that consumers have some rights against the MNC (McLibel case).
-However even if laws are introduced they may still be broken.
What are the drawbacks of using legal controls to control MNC activity?
-MNC may simply move production where there are less laws/restrictions.
-The host nation does not want to lose the economic input of the MNC so this deters laws being passed.
-MNCs can afford expensive legal defence.
How can pressure groups be used to control MNC activity?
-PG are organisations which campaign for changes in the law or new legislation.
-PG can have strong influence on public opinion + behaviour of MNC, if they want to avoid a PR disaster.
What are the benefits of using PG to control MNC activity?
-PG can ^ public awareness of MNCs activities in host countries.
-PG can create PR problems for MNCs peacefully —> change in behaviour.
What are the drawbacks of using PG to control MNC activity?
-PG needs to be large + organised if it is to have any impact on changing the activities of the MNCs.
-The size + wealth of the largest MNCs mean they can easily counter or quiten PG activity.
How can social media be used to control MNC activity?
-Tools such as Twitter can see the swift mobilisation of public opinion + hence pressure on MNCs to change their behaviour.
-SM networks can be used to orchestrate a boycott which will affect the sales + reputation of the MNC.
What are the benefits of using SM to control MNC activity?
-SM can be a very powerful way to change the behaviour of MNCs
-For example, twitter can put pressure on large corps.
-Trip advisor
What are the drawbacks of using SM to control MNC activity?
-SM can only effect short-term change. The internet is a dynamic medium, fickle customers become bored easily + move onto the next scandal.
-A MNC can just dust itself down and carry on(little impact).
