CHAPITRE

3

The place of multinational companies

BACKGROUND

La place des firmes multinationales

R   
Using the information above, answer the following questions.
a. What is a multinational corporation and how does it function?
A multinational company produces merchandise or provides services in more than one country.
b. Why do some countries welcome multinationals and how do they attract them?
Some countries welcome multinationals because the investment from these companies provides jobs and training in new skills. They attract them by offering them financial advantages such as tax cuts, government help and lax enforcement of environmental and labour standards.
c. How are the companies able to deal with worldwide competition?
They benefit from cheap labour which reduces their costs and they hold patents which protect them from competition.
d. What may the host countries have to combat sometimes and how do they set about it?
The host country may find it difficult to enforce national laws especially when the multinational is very big and tries to impose its power. To limit this power, the national government may threaten to nationalise the company and force it to sell its local assets to the government or to local nationals. The host country can also make changes in local business laws and regulations which will also limit the multinational’s power.
e. What recommendations has the OECD made?
The OECD reminds the multinationals of the principles and standards for responsible business conduct. They concern business ethics on employment, human rights, the environment, information disclosure, combating bribery, consumer interests, science and technology, competition and taxation.
3 – The place of multinational companies

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CHAPITRE

BACKGROUND

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f. How and why has the attitude of the MNCs to ethical issues changed?
Their attitude has changed because when the general public is informed of any