Why do governments try to control MNCs?
To prevent exploitation of stakeholders and reduce negative economic, social and environmental impacts.
How do consumer protection laws affect MNCs?
Ensure product safety standards → Prevent harm to customers.
What are the main ways governments influence MNCs?
Legislation (laws & regulations)
Political policies (tax, subsidies)
State ownership
Competition policy
How can employment law control MNCs?
Minimum wage laws + health and safety regulations → Protect workers from exploitation.
How do environmental laws control MNC behaviour?
Limit emissions + regulate waste disposal → Reduce environmental damage.
What are tariffs and how can they influence MNCs?
Taxes on imports → Encourage MNCs to source locally → Reduce import dependency.
What are local content requirements?
Laws requiring MNCs to employ local workers or use local suppliers.
How can competition laws control MNCs?
Prevent monopolies and misuse of market power.
What are limitations of legal control?
Difficult to enforce
Conflicts between countries’ laws
Risk MNC relocates
How can local content laws benefit the host economy?
Use local labour → Higher employment → Increased income → More spending in local economy → Economic growth.
How can governments restrict transfer pricing?
Require internal transactions to occur at market value → Reduce tax avoidance.
What is a government policy?
A course of action used by a government to address an issue.
How can governments attract MNCs?
Lower corporation tax
Subsidies
Grants
Why are low-tax countries sometimes criticised?
They may attract MNC profits away from other countries → “Stealing” tax revenues.
Why might state-owned MNCs be easier to control?
Government ownership → Direct influence over decisions.
Why might state-owned MNCs be less efficient?
Less pressure to make profit → Reduced incentive to minimise costs.
How does social media influence MNC behaviour?
Rapid sharing of information → Public campaigns → Reputational pressure.
What is a pressure group?
A group seeking to influence government policy or business behaviour.
What are limitations of pressure groups?
Risk of illegal/extreme actions
Reduced public support
Limited power without media attention
What are weaknesses of social media campaigns?
Spread of misinformation
Short-term public interest
Trend-driven activism
How do pressure groups influence MNCs?
Naming and shaming
Protests and strikes
Campaigns for legislative change
Why does the level of control depend on a country’s power?
Large markets (high disposable income) → MNCs more willing to comply.
Why might resource-dependent MNCs be easier to control?
If resource is only available in one country → MNC cannot easily relocate.
Why might governments avoid strict control?
Fear of losing:
Jobs
Tax revenue
FDI inflows
-
4.1.1 - Growing Economies36
-
4.1.2 - International Trade29
-
4.1.3 - Factors contributing to increased globalisation28
-
4.1.4 + 4.1.5 - Protectionism & Trading Blocs33
-
4.2.1 - Conditions that prompt trade22
-
Offshoring and outsourcing29
-
Assessing a country as a market26
-
Assessing a country as a production location33
-
Global Mergers and Joint Ventures24
-
Global Competition26
-
Global Marketing Strategies26
-
Global Niche Markets15
-
Cultural and Social Differences9
-
Multinational Corporations30
-
MNCs and Ethics25
-
Controlling MNCs25
