Controlling MNC's (4.4.3) Flashcards
What factors need to be considered when controlling MNC’s?
- Political Influence
- Legal Control
- Pressure Groups
- Social Media
How can Political influence be used to control MNC’s?
Political institutions enforce laws and regulations which businesses need to adhere to. MNC’s must work within the institutional framework of that country. However bribes may be paid to secure lucrative contracts
What are some examples of political influence?
-Grants and subsidies
-Tax incentives
-Tariff and Non-Tariff Trade barriers
-Entering trading blocs
What can MNC’s do in developed countries for their benefit?
In developed countries MNC’s can exert pressure on national governments to create favourable conditions for their business
How can Legal Control be used to control MNC’s?
Governments can enforce legislation and regulation to control the operations of MNCs. Governments want to attract MNCs to help boost their economy, so creating legal control in areas relating to taxes and employment ensures stability for the MNC
What are some examples of Legal control?
-Competition policy
-Employment law
-Environmental protection
-Consumer Law
What are pressure groups?
Organisations that operate to influence company and public policy in the interest of a particular cause
How can Pressure Groups be used to control MNC’s?
-Naming and Shaming to gain consumer attention
-Direct action (Protests, strikes and boycotting products)
-Influencing gov legislation
This helps to affect the reputation of the MNC
What does social media involve?
The interaction of people via electronic devices using social media platforms
How can MNC’s use social media to their advantage?
To spread awareness and promote their business on a global scale
Why can Social Media be a downside for MNC’s?
-Social media allows stakeholders to freely share information about the unethical behaviour of MNC’s
-This them means MNC’s are forced to address the issues raised on social media as there is a high level of public exposure and information can spread rapidly
-MNC influence on social media may also be limited in some countries as they have regulations in place to manage social media power (China + Russia closely monitor social media)
What are some example of use of social media to control MNC’s?
-Publicises pressure group concerns
-influences consumer trends
-Allows two-way communication
-Quick spread of viral issues
Can we fully control MNC’s?
There are those 4 ways of controlling MNC’s but to a certain extent they can’t be controlled as they are quite big companies and therefore there is difficulty in controlling them
What is Transfer Pricing?
Relocates profit to a tax haven (minimal or no tax country) to avoid paying Corporation Tax whenever possible
