4 4 global industries and multinational corporations

A multinational company (MNC) is a business that is registered in one country but has manufacturing operations or outlets in different countries.

True. Factors such as globalisation and deregulation have contributed to the growth of MNCs.

The acronym FDI stands for foreign direct investment.

The balance of payments is a statement showing all of the financial transactions between a country and the rest of the world.

True. MNCs can help to improve the balance of payments in a country, as FDI flows into that country.

Transfer pricing is a method used by MNCs to shift profits from where they are generated to countries with lower tax rates.

A joint venture is a contractual agreement between two or more firms to combine resources and expertise to achieve a particular goal.

Consumer benefits include:

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. Many countries welcome MNCs because they often offer more competitive wages and better working conditions than local businesses.

Business ethics are the principles, attitudes and norms that govern business behaviour.

A stakeholder is an individual or group that affects or is affected by the actions of a business.

True. MNCs often operate in countries that have different employment regulations and working conditions.

A sweatshop is a factory or warehouse with poor working conditions and where workers receive low pay.

False. Customers around the world are putting more and more pressure on brands to behave ethically.

Corporate Social Responsibility (CSR) is how a business integrates social and environmental concerns into its business operations .

The supply chain consists of all the suppliers involved in the manufacturing of a product.

False. MNCs using child labour in their supply chain face backlash, which can damage their brand and affect sales.

False. A product's labelling must comply with the regulations of the country in which it is sold.

Child labour refers to the employment of school-aged children, often working extremely long hours to generate income for the family.

False. MNCs can usually dispose of waste in LEDCs at a lower cost than in their home countries.

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.

A pressure group is an organisation that attempts to influence company or government policy in the interest of a particular cause.

True. MNCs may pay bribes to government officials to secure lucrative contracts, especially in LEDCs.

True. MNCs can use social media to their advantage to spread awareness and promote their business on a global scale.

Ways pressure groups take direct action include:

True. Governments enforce legislation and regulations to control the operations of 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. Governments want to attract MNCs to help boost their economies.

Legislation is the set of laws or regulations that compel individuals or organisations to behave in a desired way.

True. Social media enables stakeholders to freely share information about the unethical behaviour of MNCs.

Anti-competitive practices are business practices that prevent or reduce the level of competition in a market.