Theme 4.4 - Global Industries Flashcards
What is a multinational company (MNC)
- where manufacturing/operation/ outlets in different countries
Advantages of MNCs on local economies
- Job creation, more competitive wages, better working conditions
- Boost local economy, more spending increase in money in the local area
- Improvement of infrastructure due to reinvestment
Disadvantages of MNCs on local economies
- May exploit workers, lower labour pay
- reduce supply of workers for local business due to higher wages more competitive
What is FDI
Foreign direct investment
(initial inflow into the country)
Advantages of FDI
- Initial lump sum
- enriches local firms/citizens
- Tech and skill transfer
- Consumer benefits, wider choice and lower prices
Disadvantages of FDI
- Assets owned/partially by foreign business
- Can eventually push domestic business out of market
What are balance of payments
All financial transactions between country snd rest of world
Advantages of business culture (MNCs)
- Encourages culture of entrepreneurship
Disadvantages of business culture (MNCs)
- MNCs may demonstrate unethical behaviour
Tax revenue from MNCs
Host country to gain significant tax revenue which can be reinvested into the country to improve public transport, infrastructure
MNCs transfer pricing
Where MNCs ship profits out of countries operating in and into tax havens
What are ethical considerations
Will determine how business functions based of values
3 Ethical considerations
- Environmental consideration (waste management, pollution, depletion of scares resources)
- Stakeholder conflict
- Supply chain consideration
2 Marketing considerations
- misleading labelling
- inappropriate promotion
What can control MNCs
- Political influence (laws/regualtions to adhere to)
- Pressure group (influence companies and public policy)
- Legal control
- Social media (spread awareness, high level of public exposure)
