4.4.3 Controlling MNCs

Question 1

What is the main reason MNC activities need to be controlled?

Answer 1

To make sure MNCs don’t exploit stakeholders or have negative effects on the economy.

Question 2

What ways can MNCs be controlled?

Answer 2

Legal control
Political influence
Social media
Pressure groups

Question 3

How is legislation used to control MNCs?

Answer 3

- Governments can enforce tariffs and quotas on the imports of raw materials
- Employment laws for minimum wages
- Environmental laws to limit greenhouse gas emissions
- Laws on competition to prevent an MNC from creating a monopoly

Question 4

How is political influence used to control MNCs?

Answer 4

Government might offer subsidies, grants or low rates of corporation tax to attract MNCs to their country.

Question 5

How are pressure groups used to control MNCs?

Answer 5

- They name and shame specific MNCs that they think are unethical.
- They can raise awareness of issues quickly, eg via social media.

Question 6

How is social media used to control MNCs?

Answer 6

- Allows people to quickly share information about an MNCs unethical practices and organise large campaigns.
- This puts pressure on firms to change their practices to save their brand image.