4.4.3 - Factors

Factors that control MNCs

1. Political influence

2. Legal control

3. Pressure groups

4. Social media

Strengths of political influence

• Many MNCs want political approval from the government of host nations as it often makes trading there more easy (e.g gaining trade incentives)

• In developed countries, MNCs will often comply with changes to avoid the risk of being shut out of a lucrative market

Weaknesses of political influence

• In poorer developing countries, the government may turn a blind eye to an MNC’s unethical business practices as they provide a lot of value to the economy

• Politicians can be bribed, especially in developing countries

Strengths of legal control

• Laws can be passed quickly at any point to control the actions of MNCs

Weaknesses of legal control

• MNCs can afford expensive legal defense of any challenges and drag on cases for years (may damage reputation though)

• The MNC may simply move to another country with less laws and regulations (global cooperation is required to truly control a MNC)

Strengths of pressure groups

• Pressure groups effectively spread public awareness of MNC activities which may lead to a loss of reputation for the MNC

• They can quickly alert large number of customers via social media - leading to boycotts and other action

Weaknesses of pressure groups

• The size and wealth of large MNCs mean that they can easily counter or quieten pressure group activity

• The pressure group needs to be large and well known in order to have any real impact on an MNCs practices

Strengths of social media

• Platforms such as Twitter can see swift mobilisation of public opinion and hence pressure MNCs to change their behaviour

• Companies like trip advisor are a very powerful way for customers to voice opinions that can lead to change

Weaknesses of social media

• Social media is generally only effective for short term change as the internet is a dynamic environment where people forget or end up not caring quickly

• Often times a MNC can just carry on with their practices and see little impact on their activities