Business and Economics Unit 3 Chapter 7
- Created by: LML09
- Created on: 10-12-15 10:22
View mindmap
- MNCS " businesses which are active in more than one country"
- What are they?
- Very large organisations, with turnover exceeding the GDP of many countries. Some may be small scale
- Offices or factories in different countries and usually have a centralised head office where they coordinate global management, where they are based. Other countries are known as host countries
- Most of the largest are American, Japanese or European. India and China now have large MNCs which are growing rapidly (Tata)
- Why have they expanded?
- To reduce costs
- To take advantage of government incentives
- Governments offer incentives to attract MNCS to their countries. These can be grants, cheap loans, tax breaks and subsidies, which can cut production costs
- To access new markets
- To get round trade barriers
- Wish to penetrate markets to avoid tariffs or quotas
- To control resoucres
- Positives
- Creates FDI
- Brings jobs
- Regional multiplier effect
- Skills and technology transfer
- Increased demand for local businesses/ suppliers
- Increased tax revenues
- Export earnings
- Other MNCs may follow
- CSR policies bring benefits
- Negatives
- Illegal and unethical behaviour
- Exploitation of labour- low wages, poor working conditions, lack of health and safety, child labour
- Environmental degradation/ pollution
- Unsustainable practices
- Tax avoidance
- 'Race to the bottom'
- Cultural imperialism
- Local businesses pushed out
- Profits repatriated and not put back into local economy
- Factors that can control MNC behaviour
- Public opinion
- Pressure groups
- Social media and the internet
- The media
- Self- regualtiob
- Government control and regualtions
- Legal enforcement
- Shareholder groups
- What are they?
Comments
No comments have yet been made