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Flashcards in 4.4 Deck (16)
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impact of MNCs (locally)

- generate jobs
- opportunity for development of skills
- increased wages and working conditions
- increased demand for labour= more competition for skilled workers
- infrastructure
- social enterprise


impact of MNCs (internationally)

- FDI flows
- technology and skill transfer
- consumer benefits
- culture
- transfer pricing


how do MNCs impact FDI?

- leads to spending in the economy,
- creates jobs,
- lowers level of unemployment


how do MNCs impact technology and skill transfer?

- train/develop knowledge and skills
- may develop local industries and improve competitiveness


what benefits do MNCs bring to consumers?

- lower prices
- more choice
- improved quality
- better living standard


what is the impact of MNCs on transfer pricing?

- an MNC will ensure it is selling its products through a country with the lowest tax levels
- often operate across countries


impact of increased global ethics?

- greater pressure to act ethically, but greater scope to break ethical codes
- whats considered ethically acceptable in one country may not in another


global ethics and stakeholders: governments and NGOs:

- will place pressure on MNCs to ensure they pay correct levels of tax


global ethics and stakeholders: shareholder:

- seek the greatest return on their investment and profit maximisation


global ethics and stakeholders: customers:

- increasingly conscious of where their products come from, focus on ethical sources


global ethics and stakeholders: communities:

- negative impacts such as pollution, cause bad publicity


ethical business practices may relate to:

- acceptable pay levels: 'living wage'
- suitable working conditions
- human rights, no inhumane treatment


environmental considerations:

- Some legislation's don’t exist is LEDCs
- Legislation on how businesses dispose of and manage waste may also not be enforced rigorously in some countries
- can impact costs and conflict with profit for some MNCs


supply chain considerations:

- Difficult to know if workers have been exploited somewhere down the supply chain, e.g. use of child labour
- Makes it easier for MNCs to hide unethical behaviour


unethical marketing practices may include:

- misleading labelling/packaging
- false claims in advertising


what are different influences on MNCs?

- political influence
- social media
- legal controls
- pressure groups
- taxation policies