What is a multinational company (MNC)?
Enjoying Flashcards?
Tell us what you think
What is a multinational company (MNC)?
A multinational company (MNC) is a business that is registered in one country but has manufacturing operations or outlets in different countries.
True or False?
Factors such as globalisation and deregulation have contributed to the growth of MNCs.
True.
Factors such as globalisation and deregulation have contributed to the growth of MNCs.
What does the acronym FDI stand for?
The acronym FDI stands for foreign direct investment.
What is the balance of payments?
The balance of payments is a statement showing all of the financial transactions between a country and the rest of the world.
True or False?
MNCs can help improve the balance of payments of the country in which they operate.
True.
MNCs can help to improve the balance of payments in a country, as FDI flows into that country.
What is transfer pricing?
Transfer pricing is a method used by MNCs to shift profits from where they are generated to countries with lower tax rates.
Define the term joint venture.
A joint venture is a contractual agreement between two or more firms to combine resources and expertise to achieve a particular goal.
State two ways MNCs benefit consumers in a country in which they operate.
Consumer benefits include:
A wider choice of goods and services
Lower prices if MNCs pass their cost advantages on
Better quality of goods and services
Improved living standards
Higher incomes due to job creation
What does the term technology transfer mean?
Technology transfer is where MNCs bring new technologies and skills to local businesses. This helps improve efficiency and productivity, helping domestic businesses become more competitive.
True or False?
MNCs may offer more competitive wages and better working conditions than local businesses.
True.
Many countries welcome MNCs because they often offer more competitive wages and better working conditions than local businesses.
What is meant by the term business ethics?
Business ethics are the principles, attitudes and norms that govern business behaviour.
Define the term stakeholder.
A stakeholder is an individual or group that affects or is affected by the actions of a business.
True or False?
MNCs often operate in countries that have different employment regulations and working conditions.
True.
MNCs often operate in countries that have different employment regulations and working conditions.
What is a sweatshop?
A sweatshop is a factory or warehouse with poor working conditions and where workers receive low pay.
True or False?
Customers around the world are putting more and more pressure on brands to behave unethically.
False.
Customers around the world are putting more and more pressure on brands to behave ethically.
State the meaning of the term corporate social responsibility.
Corporate Social Responsibility (CSR) is how a business integrates social and environmental concerns into its business operations .
Define the term supply chain.
The supply chain consists of all the suppliers involved in the manufacturing of a product.
True or False?
MNCs using child labour in their supply chain face few consequences.
False.
MNCs using child labour in their supply chain face backlash, which can damage their brand and affect sales.
True or False?
Product labelling must comply with the internationally-agreed regulations.
False.
A product's labelling must comply with the regulations of the country in which it is sold.
What is child labour?
Child labour refers to the employment of school-aged children, often working extremely long hours to generate income for the family.
True or False?
It is expensive for MNCs to dispose of waste in LEDCs.
False.
MNCs can usually dispose of waste in LEDCs at a lower cost than in their home countries.
What is meant by resource depletion?
Resource depletion occurs when renewable and non-renewable natural resources become scarce because they are consumed faster than they can recover. It is commonly associated with water usage, fossil fuel consumption, trees and fishing.
What is a pressure group?
A pressure group is an organisation that attempts to influence company or government policy in the interest of a particular cause.
True or False?
MNCs may pay bribes to government officials to secure lucrative contracts.
True.
MNCs may pay bribes to government officials to secure lucrative contracts, especially in LEDCs.
True or False?
MNCs can use social media to their advantage to spread awareness and promote their business on a global scale.
True.
MNCs can use social media to their advantage to spread awareness and promote their business on a global scale.
Give two ways a pressure group may take direct action against a business.
Ways pressure groups take direct action include:
Naming and shaming
Protests
Strikes
Boycotting products
Lobbying by taking issues directly to the government
True or False?
Governments enforce legislation and regulations to control the operations of MNCs.
True.
Governments enforce legislation and regulations to control the operations of MNCs.
What is political influence, in relation to MNCs?
Political influence refers to the ability of MNCs to exert pressure on national or regional governments through lobbying in order to create favourable conditions for their businesses.
True or False?
Governments want to attract MNCs to help boost their economies.
True.
Governments want to attract MNCs to help boost their economies.
What is legislation?
Legislation is the set of laws or regulations that compel individuals or organisations to behave in a desired way.
True or False?
Social media enables stakeholders to freely share information about the unethical behaviour of MNCs.
True.
Social media enables stakeholders to freely share information about the unethical behaviour of MNCs.
What are anti-competitive practices?
Anti-competitive practices are business practices that prevent or reduce the level of competition in a market.