4.4 Global industries and companies (MNC)

Question 1

MNC

Answer 1

multinational corporation one that has branches or manufacturing plants in several countries.

Question 2

impact MNCs have on employment (P+N)

Answer 2

POSITIVE
western training methods
provides jobs which can boost economy
working conditions have to meet global/western standards
MNC usually pay higher wages than local firms
NEGATIVES
strips local businesses of trained staff
locals may be payed less than westerners but doing the same job as westerners
conditions above average but still shocking to westerners
success could be at the risk of local firms

Question 3

impact MNCs have on local businesses

Answer 3

can be positive - new MNC’s will look for local suppliers with workers using local businesses services during lunchbreaks and working hours

Question 4

impact MNCs have on local communities/environments

Answer 4

MNC’s are known for destroying local environments but even local businesses can cause more damage to environments in places where there is no regulation as MNC’s still have to follow global standards and regulation.

Question 5

IMPACT OF MNCs ON NATIONAL ECONOMY

Answer 5

FDI flows - MNC investing into other countries pumps cash into their economies and creates jobs
Balance of payments - MNC can help keep economies currency stable
Tech and skills transfer - the Local economy of MNC’s can copy techniques used to improve efficiency of their own businesses.
CONSUMERS: Consumers gain more choice with MNC firms entering their country.
Business culture: Host countries may not have the professionalism or consistency of MNC, so they can help introduce business culture.
Tax revenues and transfer pricing: MNC’s try maximise profits in low tax countries and make prices high in higher tax economies,

Question 6

Transfer pricing definition

Answer 6

a technique used by MNC to adjust the internal prices paid by one brand of their corporations to another as a way of minimising the total tax bill paid by the company.