4.4.3 Controlling MNCs

Question 1

What do more economically developed countries & less economically developed countries have to do with MNCs?

Answer 1

MEDCs- Often benefit from the profits of MNCs & these firms carry significant political influence on government policy

LEDCs- Often have key decision makers (autocratic rulers) who recieve payment for access to the country’s resources

important to control activities of MNCs to enhance benefits & reduce disadvantages of what they offer

Question 2

What factors are there to conisder when controlling MNCs?

Answer 2

• Political Influence
• Legal Control
• Pressure Groups
• Social Media

Question 3

Why should you conisder political influence when controlling MNCs?

Answer 3

• Political institutions enforce laws & regulations which businesses need to adhere to
  When MNCs establish themselves in new country, they must work within the institutional framework of that country
• MNCs in developed countries are often able to exert pressure on national governments through lobbying to create favourable conditions for their business
• MNCs in developing countries can influence governments as they may establish deals which are beneficial to politicians
  Bribes may be paid to secure lucrative contracts

Question 4

Why should you consider legal control when trying to control MNCs

Answer 4

• Governments can enforce legislation & regulation to control the operations of MNCs
• Governments want to attract MNCs to help boost their economy, so creating legal control in areas relating to taxes and employment ensures stability for the MNC

Question 5

When should you try to conisder pressure groups when trying to control MNCs?

Answer 5

• PGs are organisations that operate to influence company & public policy in the interest of a particular cause
• Pressure groups can operate on a national or international scale
• Pressure groups can take action in different forms, such as:
  Naming & shaming
  Direct action
  Lobbying- taking issues straight to government

Question 6

When should you consider social media when trying to control MNCs?

Answer 6

• MNCs can use social media to their advantage to spread awareness & promote their business on a global scale
  HWVR social media also enables stakeholders to freely share information about unethical behaviour of MNCs
  MNCs forced to address the issues raised on social media as there is high level of public exposure & information can spread rapidly
• MNC influence on social media may be limited in some countries as they have regulations in place to manage social media power
  E.g. The Chinese & Russian