Week 1 - Lecture 3

Question 1

Multinational Corporations definition

Answer 1

MNC is a company in which they own/control productions or service facilities in one or more than their HQ

Question 2

Eclectic Paradigm Theory : Ownership

Answer 2

Must process advantages over local firms (operating high quality technology, greater access to finance and marketing whilst having superior management.

Question 3

Eclectic Paradigm Theory :Location

Answer 3

Dodging import tariffs, take advantage of cheap labour and low taxation.

Question 4

Eclectic Paradigm Theory: INTERNALISATION

Answer 4

Transactional costs involved in the running of a business.
Firms may seek for a business wishing to do business in a foreign market

Question 5

Transfer Pricing Definiton

Answer 5

Pricing of goods varies, used to allocate profits whilst reducing tax liabilities.
Profit Shifting, avoiding tax controversies (by going to lower tax jurisdictions) Apple criticized for this.

Question 6

Economic Factors MNC

Answer 6

-Job creations, particularly in home countries, Technology Transfer and infrastructure developments

Question 7

Social Factors MNC

Answer 7

Low wages, Nike criticised for labour practices in Asia (90s), nfluence of MNC’s can change local cultures, dominance of McDonalds altering diets

Question 8

Environmental Impacts MNC

Answer 8

Large scale operations leading to environmental issues in host countries, Shell oil extractions in Nigeria causing damage in the Niger Delta