Business 4.4 Global Industries and Companies

Positive impact of MNCs: FDI
Increase GDP, economic growth, tax revenue and employment
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Positive impact of MNCs: BOP
More exports will improve BOP
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Positive impact of MNCs: Technology
MNCs bring in new technology and new skill sets
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Positive impact of MNCs: Consumers
More choice, lower prices, improved quality and better living standards
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Positive impact of MNCs: Business Culture
Workers may develop new skills and may be encouraged to set up their own businesses
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Negative impact of MNCs
May take advantage of a country's resources; if resources are bought overseas then BOP may suffer, Damage environment, Culture invasion, Could drive competition out, Companies will use transfer pricing to avoid taxes
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Why MNCs have become more and more popular
Global brands wanting to enter into new markets, search for economies of scale, escape saturated markets, avoid protectionism
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Which multinational companies bribe the most?
Extractive, Construction, Transportation and Storage
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Why do MNCs have a low level of public trust?
Because certain MNCs have been accused of avoiding tax, destroying local business and committing exploitation
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Transfer Pricing
The price established for any transaction whenever two companies that are a part of one MNC trade
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Ethical Business
To be considered ethical, the business has to be concerned with the behaviour of every part of the supply chain
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Benefits of being ethical
Higher revenues, Improved brand recognition, Employees become more motivated, New sources of finance (ethical investors)
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Drawbacks of being ethical
Higher stock costs, Higher overheads and Danger of building up false expectations
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Why do MNCs need controlling?
Protect against exploitation, Discourage resource depletion, Protect culture, Discourage abuse of market power, Protect domestic businesses
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Pressure Groups
External stakeholders who take action against MNCs being unethical
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Political and Legal methods of controlling MNCs
Tariffs and regulations, Restrictions on ownership, Subsidies or tax breaks, Competition policy and Taxation Policy
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Social methods of controlling MNCs
Naming and Shaming, Direct Action (Protests), Lobbying (petitions to government), Increasing social awareness, Ensuring greater transparency
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Institutional Framework
Systems of formal laws, procedures, customs and norms that determine behaviour and activity in a business
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Other cards in this set

Card 2

Front

More exports will improve BOP

Back

Positive impact of MNCs: BOP

Card 3

Front

MNCs bring in new technology and new skill sets

Back

Preview of the back of card 3

Card 4

Front

More choice, lower prices, improved quality and better living standards

Back

Preview of the back of card 4

Card 5

Front

Workers may develop new skills and may be encouraged to set up their own businesses

Back

Preview of the back of card 5
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