N19 [16] Opportunities & Challenges global interactions create for TNCs

Question 1

Intro 1

Answer 1

Global interactions refer to the interconnectedness and interdependence of countries and businesses through trade, communication, technology and cultural exchange.

TNCs are companies that operate in multiple countries, using global interactions to expand their reach, enhancing their competitiveness.

Question 2

Intro 2

Answer 2

While global interactions present various opportunities for TNCs, they also pose significant challenges. This essay will analyse various factors TNCs face as a result of global interactions.

Question 3

Globalisation Point, Evidence

Answer 3

One significant opportunity for TNCs arising from global interactions is the ability to effectively deploy globalisation strategies, allowing companies to adapt their products to meet cultural preferences.

The fast-food giant offers the ‘McAloo Tikki’ burger, a vegetarian option that aligns with the dietary practices of a significant portion of India’s population.

Question 4

Globalisation Explanation

Answer 4

This is crucial in an increasingly interconnected world where cultural differences are more visible and any insensitivities can quickly spread through social media and damage a brand’s reputation.

Glocalization allows TNCs to tailor their products to local preferences, fostering a loyal customer base.

Question 5

Trading Blocs Point, Evidence

Answer 5

Another opportunity for TNCs is the ability to operate within trading blocs that offer low tariff barriers, facilitating easier access to multiple markets.

The European Union (EU) serves as a prominent example of a trading bloc that allows companies to benefit from reduced tariffs and trade barriers among member states.

TNCs like Siemens, a German engineering company, can operate across EU countries without facing significant tariffs on their products.

Question 6

Trading Blocs Explanation

Answer 6

The EU’s single market allows for the free movement of goods, services, capital, and labour, which enhances the overall efficiency of TNCs.

As a result, companies can expand their reach and increase their market share in a cost-effective manner.

Question 7

Safety, Compliance, Accountability Point, Evidence

Answer 7

While global networks offer opportunities for efficiency, they also present challenges related to safety, regulatory compliance and public accountability.

The Boeing 737 MAX was grounded for 20 months due to two fatal crashes in 2018 and 2019 that claimed 346 lives.

It was revealed that Boeing cut corners on safety, rushing to bring the aircraft into the market in response to competition from Airbus.

Question 8

Safety, Compliance, Accountability Explanation

Answer 8

Boeing reportedly outsourced 70% of the 737 MAX’s design, engineering and manufacturing to over 50 strategic partners.

The company’s failure to communicate with its suppliers and manage the outsourcing process led to serious production and control problems.

This highlighted the risks of prioritising speed and cost-cutting over safety in a globalised supply chain due to competition.

Question 9

Civil Society Organisations Point, Evidence

Answer 9

Civil society organisations play a crucial role in advocating for online freedom of speech, but this can impact how TNCs operate in the digital space.

An example of this is the Electronic Frontier Foundation raising concerns about Apple’s plans in 2021 to implement a system that scans users’ iCloud photos for child sexual abuse material (CSAM).

Question 10

Civil Society Organisations Explanation

Answer 10

The EFF argued that even a well-intentioned effort to combat child exploitation could lead to other abuses.

Such scanning technology would compromise Apple’s commitment to user privacy and end-to-end encryption.

Following backlash from privacy advocates and the EFF, Apple ultimately decided to pause its plans.

This illustrates the power of civil society organisations in influencing corporate policies.