Source C

Question 1

Lack of Supply Chain Monitoring for MNCs
real life examples

Answer 1

Lack of Supply Chain Monitoring for MNCs
One of the critical disadvantages of multinational corporations (MNCs) is the lack of effective monitoring and oversight within their supply chains. This deficiency can lead to various issues, including labor exploitation, environmental degradation, and quality control problems.

Real-Life Example: Apple and Foxconn
Labor Violations: Despite Apple’s commitment to ensuring ethical labor practices, reports have surfaced indicating significant labor violations at Foxconn factories in China. These include excessive overtime, low wages, and unsafe working conditions.

Inconsistent Monitoring: While Apple conducts audits of its suppliers to assess labor conditions and compliance with its Supplier Code of Conduct, these audits often rely on self-reporting and may not accurately reflect the on-the-ground realities. Critics argue that the monitoring process lacks transparency and effectiveness, allowing violations to persist undetected.

Environmental Concerns: In addition to labor issues, Foxconn has faced criticism for its environmental practices. Reports have indicated that the company’s manufacturing processes have led to pollution and environmental degradation in the areas surrounding its factories. The lack of stringent monitoring mechanisms means that environmental violations can go unchecked.

The case of Apple and Foxconn illustrates the significant challenges MNCs face in monitoring their supply chains effectively. The complexity of global supply chains, combined with the pressure to minimize costs and maximize profits, can lead to inadequate oversight and compliance issues.