4.4- Global industries & companies

• Multinational company (MNC)


  A business that is registered and operates in more than one country at a time
• Effects of MNCs


  • Can create jobs for the local community
  • Can improve the local standard of living as MNCs often have better wages and working conditions
  • Can exploit local workers and employ children in terrible conditions and long hours, leading to health issues
  • May not create jobs for local workers and hire and relocate people from their own country to work abroad
  • Can cause damage to the local environment by using unsustainable natural resources and producing pollution and waste
• Benefits of MNCs on the national economy


  • Pay taxes to the national government, which may be reinvested into the local community
  • Can contribute to improving infrastructure, meaning better roads and transportation for the local community
  • Can bring in technology and skills transfer
  • Can lead to FDI (foreign direct investment) flows, improving the country's balance of payments
• Negative effects of MNCs on the national economy

  • Send profits back to their home country, which can force domestic firms out of business
• Ethics


  Moral principles which inform business decisions that are acceptable for society, individuals or groups
• Stakeholder conflict


  • A stakeholder is any individual or group that will be affected by the actions of a business
  • An MNC's ethical code may state that it will always pay a fair wage to employees, but shareholders might not be impressed as it reduces the MNC's profits
• Environmental impact


  • Being ethical involves considering your impact on the environment and taking steps to reduce the emissions and waste produced by the business
  • MNCs use cheap labour to extract non-renewable resources in some countries, which many consumers may view as unethical
• Supply chain


  • Global businesses need to ensure that they do not exploit labour in countries where working conditions are poorer, and must not support child labour
• Misleading consumers


  • Businesses must ensure they comply with laws and regulations to ensure they do not use misleading product labelling or inappropriate promotional activities
• Ansoff's Matrix for global growth


  1. Market penetration

  2. Market development

  3. Product development

  4. Diversification
• Methods of controlling MNCs

  • Through politics
  • Legal control
  • Pressure groups
  • Social media