effects of MNCS Flashcards
what is a MNCS
operate in several counteries
head office based on one counrty and then has branches or departments in more than one country
adv of MNCS on local eocnomies
creats jobs, increases employment
imporves standards of living e.g better wages, better working conditions
imporevs infrasturacute, imporveing local community
dis of MNCS on local economies
people may start buying from MNCS rather then local firms causing local firms to be pushed out of business
expolit workers by making them work long hours, in diffiucult conditions
may not create jobs for local workers as they may relocate workers from their own country to work abroad
might extract large quanitties of unsunatibale natural resources e.g oli, gas
might produce lagre amounts of pollution and waste
what does the NCS have to pay for any country it branches into
have to pasy tax to national government e.g taxes for profits, imports, exports etc
may use tax avoidence schemes to reduce amount of tax they pay
transfer pricing
moving money legally to different counteries
counteries with low tax rate, may charge higher pirces
adv of MNCS on national economy
causes large FDI flows-money flwoing into and out of a business
imporves counterys balance of payemnet therefore improving balance sheets
may need to train staff to new tachnology
if staff leaves, will transfer skills to different firms, imporving the economy overall
improving effeicency and producivity of the nations economy
leves of entrepreneuship impocve as people with these skills can then sue these skills to set up their own firms
dis of MNCS on national economy
can force domestic fims out of business by their prices or offering better service for consumers
might cause money to leave national ecpnomy having negative effect on host nations balance of payments e.g MNCS sending profits back to its home country
MNCS taking advanatge of developing counteries
e,g may take advnatge of lower rates of pay
spedn less on things like safety equipment and proper sanitation
saves money, cust scots however poor working conditions if caught can cause bad repuation on business
host counteries may make sure their healthy and saefty regualtions area not applied tooo much or MNCS may relocate to another LEDS with low costs
consumers may not be willing to pay for a product where its expolited its workers to be produced
might make MNCS chnage their current ways of opertaing as a business
LEDS have less strict regualtions
MNCS may locate production to LEDS
follwing strict legisaltion may be expensive for M
MNCs remainign ethical
makreting should be ethical in all counteries it operates in
MNCS might have to adpat their makreting to avoid inapporpiate promotional activities
e.g cultural noram in indonesia to give gifts but malaysia could be seen as bribe
