4.4 Flashcards
(21 cards)
What is a multinational
A company that operates in its home country as well as in other countries around the world
-it maintains a central office located in one country, which coordinates the management of all it other offices e.g. administrative branches or factories
Ad to multinationals
-access to lower production costs
-proximity to target international markets
-access to a larger talent pool
-avoidance of tariffs
-efficiency
-development
-employment
-innovation
-avoiding protectionism
-gaining access to lower costs of production
-to operate closer to target international markets
Dis of being a multinational corporation
-increased legal burden
-increased tax compliance
-public relations
-political instability
Characteristics of multinationals
-high assets. value and turnover
-network of branches
-rapid growth
-use of tech
-management skills
-advertising spend
FDI involves
-is investment of foreign money into domestic structures, equipment and businesses
-FDI creates direct, stable and long lasting links between economies
-It encourages the transfer of tech and know how between countries so that a country can develop faster
Pos Effects of MNC
-creates employment
-increase skills base
-increased standard of living
-raises countries profile
-improves balance of payment
-improved infrastructure
Neg effects of MNC
-profit leakage
-low paid jobs
-interfere in politics of country
-poor health and safety
-increased urbanisation
-widens poverty gap
Bus ethics are
Moral guidelines which govern good behaviour
Ethical principles and standards in bus:
-define acceptable conduct in bus
-should underpin how management make decision
Behaving ethically isn’t the same as lawfully:
-Ethics (right vs wrong)
-law (lawful vs unlawful)
Examples of ethical issues
-pay and working conditions
-environmental damage
-exploitation of labour
-inappropriate marketing claims
-stakeholder conflicts
Advantages of ethical behaviour
-higher revenues-demand from positive consumer support
-Improved brand and business awareness and recognition
-Better employee, motivation and recruitment
-New sources of finance, E.G.ethical investors
Disadvantages of ethical behaviour
-Higher costs- e.g. sourcing from fair trade suppliers rather than the lowest price
-higher overhead- e.g. Training and communication of ethical policies
-A danger of building up false expectations (window dressing)
what is CSR
Corporate social responsibility is the extent to which a bus addresses the concerns and obligations to its wider stakeholders
What does the CSR look at?
-Human right indicator
-Communities
-Business, integrity, and ethics
-Product Responsibility
-The environment
Why multinationals need to be controlled
-to prevent abuse of market power
-to ensure that environment damage is reduced
-to ensure that MNC pay a fair amount of tax
-to ensure that MNC behave ethically
-to protect the rights of workers
How multinationals can be controlled
-legal challenges/rulings/court cases brought by gov against MNC
-campaigns by pressure groups to change the action of MNC
-Adverse media coverage that mobilises public opinion against the MNC
-use of social networks to organise a boycott that could hit sales
How much control does the gov have over MNC
-strong gov in large countries can restrict the action of MNC
-less develop countries have less power because they need MNC to help the country to develop
-all countries find it difficult to collect taxes from MNC because of their use tax havens and subsidiary companies
-MNC pay political lobbyist to influence law makers
How much control do pressure groups and social media over MNC
Pressure groups formed by concerned individuals to attempt to change behaviour of MNC
-lobby the gov to demand change
-publicity stunts to draw attention to the problems
-consumer boycott
-set up campaigns to change public opinion
-many MNC often make superficial changes to improve their image
-Their power depends of how much support they gain and how the MNC react
-Lobby gov to bring new laws to control businesses
what is transfer pricing
-tax avoidance (illegal)
-Avoids tax by transferring sales to a different country with a lower corporation tax
tax avoidance
legal/unethical
tax evasion
illegal
how can pressure groups control MNC
-physical; action e.g. protesting
-name and shame
lobbying (taking issues to gov)
