Controlling MNCs Flashcards
Explain using political influence to control MNC activity.
Governments can apply pressure to attempt to change the behaviour of MNCs
For example MNCs have been avoiding paying tax in the UK
Starbucks
Google
Amazon
Since 2012, when the UK Chancellor at the time, put tax avoidance on the G20 agenda, the UK has helped reform international tax rules and led the way with action to prevent corporations from paying little or no taxes
What are the benefits of using political influence to control MNC activity?
MNCs may wish to get political approval from the governments of the host nations, this may help trade and setting up in a new country
If the MNC gains political approval they may find trading smoother and less troublesome
What are the drawbacks of using political influence to control MNC activity?
Politicians can be bribed, not such an issue in the UK but quite common in other countries
Some MNCs bring so much wealth and employment to an economy that a weaker government might ignore unethical activities, for example:
Brazil
Nigeria
Mali
Explain using legal controls to control MNC activity.
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
Quite often the MNC may ignore or flout these regulations
What are the benefits of using legal controls to control MNC activity?
Laws can be passed at any point to control the actions of a MNC which are already established in a country
Laws mean that consumers have some rights against the MNC as in the McLibel case
However even if laws are introduced they may still be broken by the MNCs
What are the drawbacks of using legal controls to control MNC activity?
The MNC may simply move production to a country where there are less laws and restrictions
The host nation does not want to lose the economic input of the MNC so this deters laws being passed
MNCs can afford expensive legal defence of any challenge
Explain using pressure groups to control MNC activity.
Pressure groups are organisations which campaign for changes in the law or new legislation in specific areas.
Pressure groups can have a strong influence on public opinion and behaviour of MNC, if they want to avoid a PR disaster
Pressure groups such as Greenpeace WWF Friends of the Earth War on Want
What are the benefits of using pressure groups to control MNC activity?
Pressure groups can raise public awareness of MNCs activities in host countries
Pressure groups can create PR problems for MNCs peacefully, which can lead to a change in their behaviour
What are the drawbacks of using pressure groups to control MNC activity?
The pressure group needs to be large and organised if it is to have any impact on changing the activities of the MNCs
The size and wealth of the largest MNCs mean they can easily counter or quieten pressure group activity
Explain using social media to control MNC activity.
Tools such as Twitter can see the swift mobilisation of public opinion and hence pressure on MNCs to change their behaviour
Social media can turn a product scare into a national crisis within hours
Social media networks can be used to orchestrate a boycott which will affect the sales and reputation of the MNC
What are the benefits of using social media to control MNC activity?
Social media can be a very powerful way to change the behaviour of MNCs
For example twitter can put pressure on large corporations
What are the drawbacks of using social media to control MNC activity?
Social media can only effect short-term change the Internet is a dynamic medium, fickle customers become bored easily and move on to the next scandal
A MNC can just dust itself down and carry on with very little impact on their activities
