Controlling MNCs 4.4.3

Question 1

What are factors to consider?

Answer 1

• Political influence
• Legal control
• Pressure groups
• Social media

Question 2

How can MNCs be controlled?

Answer 2

• Legal challenges / rulings/ court cases brought by governments to force MNCs to change behaviour
• Campaigns by pressure groups forcing compliance
• Public opinion and boycotts which impact on sales and bring pressure to bear
• Adverse media coverage that mobilises public opinion against the MNC
• Use of social networks to orchestrate a boycott that could hit sales

Question 3

Political influence:

Answer 3

• Governments can apply pressure to change the behaviour of MNCs
• For example, UK government joined forces with Germans to prevent tax avoidance from MNCs such as Amazon or eBay
• The spread of e-commerce and the odd nature of international corporate tax rules have left governments trailing behind MNCs as they shift profits around the globe

Question 4

Legal control:

Answer 4

• 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, e.g. reduce pollution
• This means 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

Question 5

Pressure groups:

Answer 5

• Pressure groups are organisations that campaign for changes in the law or new legislation in specific areas
• As such, they can have a strong influence on public opinion and behaviour of MNC if they want to avoid a PR disaster

Question 6

Social media:

Answer 6

• Tools such as Twitter saw the swift mobilisation of public opinion and hence pressure
• Social media can turn a product scare in one state into a national crisis within hours