4.4 Global Industries and Economies

Question 1

how do MNCs impact local labour and job creation? (negative and positive)

Answer 1

they create many jobs for the local community and provide good benefits

however, they could take employment away from local competitors and smaller businesses

Question 2

how do MNCs impact wages and working conditions?

Answer 2

when a big new business opens, it can drive up wages in the locality as the demand for workers rises

the MNCs would also often provide favourable working conditions as they have a more modern approach to business development

Question 3

how do MNCs impact local businesses? (positive)

Answer 3

they have a positive impact as the local businesses like builders, electricians etc will help out when building the new plant

when they employ people within the area, it will increase their income, which would increase spending in local businesses

Question 4

how do MNCs impact local businesses? (negative)

Answer 4

MNCs would lure workers away from local businesses by offering better wages and working conditions, therefore local businesses would struggle to compete and are often forced out the business

Question 5

how do MNCs impact the local community and environment?

Answer 5

• they improve infrastructure through investment in roads etc
• contributions to local government taxes
• participation in local cultural or sporting events and donating to local charities

Question 6

impact of MNCs on the national economy: FDI flows

Answer 6

• the money spent on establishing a facility is seen as FDI: flows of FDI results in higher GDP : higher economic growth
• local tax on MNCs can be used for government spending on things like healthcare or education
• increase in employment

Question 7

impact of MNCs on the national economy: balance of payments

Answer 7

the flow of FDI will improve the balance of payments as money will flow into the nations account

Question 8

impact of MNCs on the national economy: technology and skills transfer

Answer 8

MNCs would often introduce new technologies and modern practices into the host nation

Question 9

impact of MNCs on the national economy: consumers

Answer 9

• more choice
• lower prices: competitive
• improved quality: MNCs use high tech equipment
• better living standards: employment opportunities and higher incomes

Question 10

impact of MNCs on the national economy: business culture

Answer 10

sometimes, MNCs can lead to people who are employed to leaving their jobs and starting their own businesses, as they could encourage them to become suppliers

Question 11

impact of MNCs on the national economy: tax revenues and transfer pricing

Answer 11

MNCs will try to avoid as much tax as possible, so they will try to operate in low tax countries in order to maximise profits

Question 12

define stakeholder

Answer 12

an individual/group that takes an interest and is affected by an organisation

Question 13

2 stakeholder issues: consumers

Answer 13

• product safety
• misleading advertising

Question 14

3 stakeholder issues: employees

Answer 14

• employee safety
• employee redundancies
• pay and working conditions

Question 15

stakeholder issue: shareholders

Answer 15

• ST vs LT return on shares, they focus on seeking a return on their investment through dividends

Question 16

stakeholder issue: countries/communities

Answer 16

• environmental concerns like if the business’ activities are polluting or damaging the environment

Question 17

the importance of good pay and working conditions

Answer 17

in order for a business to be ethical, they must offer good pay and good working conditions of employees and they must ensure that employees are not exposed to dangerous conditions like chemicals or poor ventilation, like in sweatshops

Question 18

environmental considerations : emissions

Answer 18

a business would need to reduce the amount of emissions they create

Question 19

environmental issues: waste disposal

Answer 19

a business needs to ensure they have the right infrastructure to allow for efficient waste removal, like having good roads

Question 20

supply chain considerations: exploitation of labour and child labour

Answer 20

businesses are taking steps to keep products free from exploited labour and child labour

Question 21

marketing considerations: misleading labelling

Answer 21

the label on the product cannot be misleading and must be true to price, quantity and size of the product

Question 22

marketing considerations: inappropriate promotional activities

Answer 22

they need to ensure that the advertising used is appropriate and not offensive/illegal as it can ruin the brands rep

Question 23

political influence on MNCs

Answer 23

• tariffs, quotas and requirements can be used to protect domestic businesses from international competitors

Question 24

benefit and drawback of using political influence to control MNCs

Answer 24

(+) helps elected officials challenge the power of private businesses and address concern

(-) facilitates corruption

Question 25

what is competition policy

Answer 25

government policy that promotes competition and ensure firms don’t abuse their market power

Question 26

how can laws be used to control MNCs?

Answer 26

If a country introduces laws to reduce pollution or protect children from child labour then this will all cost the MNC money to improve their practices e.g. reduce pollution​

This means the MNC may simply move production to a country where there are less laws and restrictions

Question 27

how can pressure groups control MNCs?

Answer 27

Pressure groups are organisations which campaign for changes in the law or new legislation in specific areas.

As such, they can have a strong influence on public opinion and behaviour of MNC if they want to avoid a PR disaster.

Question 28

how can social media control MNCs?

Answer 28

social media can raise awareness to an issue quickly, and there have been arranged boycotts on social media before