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Don't just learn it, experience it! DP Business Management
  • Home
  • Course Guide
    • Aims & Objectives
    • Command Terms
    • Concepts, Contexts & Content
    • Curriculum Overview
    • Assessment
      • Paper 1
      • Paper 2
    • Case Studies
    • Links to TOK
    • Symposium Series
    • Book Reviews
  • Course Units
    • Unit 1 Organisation
      • U1.1 Intro to business management
        • U1.1.1 The role of business
        • U1.1.2 Business functions
        • U1.1.3 Sectors of business activity
        • U1.1.4 Entrepreneurship and Intrapreneurship
        • U1.1.5 Reasons for starting a business
      • U1.2 Types of organisations
        • U1.2.1 For-profit organisations
        • U1.2.2 Non-profit organisations
        • U1.2.3 Other types of organisations
      • U1.3 Organisational objectives
        • U1.3.1 Vision and mission statements
        • U1.3.2 Aims, objectives, strategies and tactics
        • U1.3.3 Ethical objectives
        • U1.3.4 SWOT analysis
        • U1.3.5 Ansoff matrix
      • U1.4 Stakeholders
      • U1.5 External environment
      • U1.6 Growth and evolution
        • U1.6.1 Economies and diseconomies of scale
        • U1.6.2 Merits of small vs large organisations
        • U1.6.3 Internal vs external growth
        • U1.6.4 Impact of globalisation
        • U1.6.5 Multinational companies
      • U1.7 Organisational planning tools (HL)
    • Unit 2 HR
      • U2.1 Functions and evolution of HR management
      • U2.2 Organisational structure
      • U2.3 Leadership and management
      • U2.4 Motivation
      • U2.5 Organisational culture (HL)
      • U2.6 Industrial/employee relations (HL)
    • Unit 3 Finance & Accounts
      • U3.1 Sources of finance
      • U3.2 Costs and revenues
      • U3.3 Break-even analysis
      • U3.4 Final accounts
      • U3.5 Profitability and liquidity ratio analysis
      • U3.6 Efficiency ratio analysis (HL)
      • U3.7 Cash flow
      • U3.8 Investment appraisal (HL)
      • U3.9 Budgets (HL)
    • Unit 4 Marketing
      • U4.1 The role of marketing
      • U4.2 Marketing planning
      • U4.3 Sales forecasting (HL)
      • U4.4 Market research
      • U4.5 The 4 Ps (product, price, promotion, place)
        • U4.5.1 Product
        • U4.5.2 Price
        • U4.5.3 Promotion
        • U4.5.4 Place
      • U4.6 The extended marketing mix of seven P's (HL)
      • U4.7 International marketing (HL)
      • U4.8 E-commerce
    • Unit 5 Operations
      • U5.1 The role of operations management
      • U5.2 Production methods
        • U5.2.1 Job production
        • U5.2.2 Batch production
        • U5.2.3 Mass production
        • U5.2.4 Cellular manufacturing
        • U5.2.5 Changing production method
        • U5.2.6 Choosing production method
      • U5.3 Lean production and quality management (HL)
        • U5.3.1 Methods of lean production
        • U5.3.2 Cradle-to-cradle design and manufacturing
        • U5.3.3 Quality control and quality assurance
      • U5.4 Location
        • U5.4.1 Factors in locating a business
        • U5.4.2 Impact of globalisation on location
        • U5.4.3 Outsourcing and offshoring
      • U5.5 Production planning (HL)
      • U5.6 Research and development (HL)
      • U5.7 Crisis management and contingency planning (HL)
  • IA
    • IA1 Overview
    • IA2 SL Written Commentary
      • IA2.1 IA criteria - SL
      • IA2.2 Sample IAs
    • IA3 HL Research Project
      • IA3.1 IA criteria - HL
      • IA3.2 Sample IAs
    • IA4 Tips and checks
  • EE
    • EE1 Overview
    • EE2 Choice and treatment of topic
    • EE3 Assessment Criteria
    • EE4 Examples
  • Skills
    • S1 Research
    • S2 Business tools
Don't just learn it, experience it! DP Business Management
  • Home
  • Course Guide
    • Aims & Objectives
    • Command Terms
    • Concepts, Contexts & Content
    • Curriculum Overview
    • Assessment
      • Paper 1
      • Paper 2
    • Case Studies
    • Links to TOK
    • Symposium Series
    • Book Reviews
  • Course Units
    • Unit 1 Organisation
      • U1.1 Intro to business management
        • U1.1.1 The role of business
        • U1.1.2 Business functions
        • U1.1.3 Sectors of business activity
        • U1.1.4 Entrepreneurship and Intrapreneurship
        • U1.1.5 Reasons for starting a business
      • U1.2 Types of organisations
        • U1.2.1 For-profit organisations
        • U1.2.2 Non-profit organisations
        • U1.2.3 Other types of organisations
      • U1.3 Organisational objectives
        • U1.3.1 Vision and mission statements
        • U1.3.2 Aims, objectives, strategies and tactics
        • U1.3.3 Ethical objectives
        • U1.3.4 SWOT analysis
        • U1.3.5 Ansoff matrix
      • U1.4 Stakeholders
      • U1.5 External environment
      • U1.6 Growth and evolution
        • U1.6.1 Economies and diseconomies of scale
        • U1.6.2 Merits of small vs large organisations
        • U1.6.3 Internal vs external growth
        • U1.6.4 Impact of globalisation
        • U1.6.5 Multinational companies
      • U1.7 Organisational planning tools (HL)
    • Unit 2 HR
      • U2.1 Functions and evolution of HR management
      • U2.2 Organisational structure
      • U2.3 Leadership and management
      • U2.4 Motivation
      • U2.5 Organisational culture (HL)
      • U2.6 Industrial/employee relations (HL)
    • Unit 3 Finance & Accounts
      • U3.1 Sources of finance
      • U3.2 Costs and revenues
      • U3.3 Break-even analysis
      • U3.4 Final accounts
      • U3.5 Profitability and liquidity ratio analysis
      • U3.6 Efficiency ratio analysis (HL)
      • U3.7 Cash flow
      • U3.8 Investment appraisal (HL)
      • U3.9 Budgets (HL)
    • Unit 4 Marketing
      • U4.1 The role of marketing
      • U4.2 Marketing planning
      • U4.3 Sales forecasting (HL)
      • U4.4 Market research
      • U4.5 The 4 Ps (product, price, promotion, place)
        • U4.5.1 Product
        • U4.5.2 Price
        • U4.5.3 Promotion
        • U4.5.4 Place
      • U4.6 The extended marketing mix of seven P's (HL)
      • U4.7 International marketing (HL)
      • U4.8 E-commerce
    • Unit 5 Operations
      • U5.1 The role of operations management
      • U5.2 Production methods
        • U5.2.1 Job production
        • U5.2.2 Batch production
        • U5.2.3 Mass production
        • U5.2.4 Cellular manufacturing
        • U5.2.5 Changing production method
        • U5.2.6 Choosing production method
      • U5.3 Lean production and quality management (HL)
        • U5.3.1 Methods of lean production
        • U5.3.2 Cradle-to-cradle design and manufacturing
        • U5.3.3 Quality control and quality assurance
      • U5.4 Location
        • U5.4.1 Factors in locating a business
        • U5.4.2 Impact of globalisation on location
        • U5.4.3 Outsourcing and offshoring
      • U5.5 Production planning (HL)
      • U5.6 Research and development (HL)
      • U5.7 Crisis management and contingency planning (HL)
  • IA
    • IA1 Overview
    • IA2 SL Written Commentary
      • IA2.1 IA criteria - SL
      • IA2.2 Sample IAs
    • IA3 HL Research Project
      • IA3.1 IA criteria - HL
      • IA3.2 Sample IAs
    • IA4 Tips and checks
  • EE
    • EE1 Overview
    • EE2 Choice and treatment of topic
    • EE3 Assessment Criteria
    • EE4 Examples
  • Skills
    • S1 Research
    • S2 Business tools
  • More
    • Home
    • Course Guide
      • Aims & Objectives
      • Command Terms
      • Concepts, Contexts & Content
      • Curriculum Overview
      • Assessment
        • Paper 1
        • Paper 2
      • Case Studies
      • Links to TOK
      • Symposium Series
      • Book Reviews
    • Course Units
      • Unit 1 Organisation
        • U1.1 Intro to business management
          • U1.1.1 The role of business
          • U1.1.2 Business functions
          • U1.1.3 Sectors of business activity
          • U1.1.4 Entrepreneurship and Intrapreneurship
          • U1.1.5 Reasons for starting a business
        • U1.2 Types of organisations
          • U1.2.1 For-profit organisations
          • U1.2.2 Non-profit organisations
          • U1.2.3 Other types of organisations
        • U1.3 Organisational objectives
          • U1.3.1 Vision and mission statements
          • U1.3.2 Aims, objectives, strategies and tactics
          • U1.3.3 Ethical objectives
          • U1.3.4 SWOT analysis
          • U1.3.5 Ansoff matrix
        • U1.4 Stakeholders
        • U1.5 External environment
        • U1.6 Growth and evolution
          • U1.6.1 Economies and diseconomies of scale
          • U1.6.2 Merits of small vs large organisations
          • U1.6.3 Internal vs external growth
          • U1.6.4 Impact of globalisation
          • U1.6.5 Multinational companies
        • U1.7 Organisational planning tools (HL)
      • Unit 2 HR
        • U2.1 Functions and evolution of HR management
        • U2.2 Organisational structure
        • U2.3 Leadership and management
        • U2.4 Motivation
        • U2.5 Organisational culture (HL)
        • U2.6 Industrial/employee relations (HL)
      • Unit 3 Finance & Accounts
        • U3.1 Sources of finance
        • U3.2 Costs and revenues
        • U3.3 Break-even analysis
        • U3.4 Final accounts
        • U3.5 Profitability and liquidity ratio analysis
        • U3.6 Efficiency ratio analysis (HL)
        • U3.7 Cash flow
        • U3.8 Investment appraisal (HL)
        • U3.9 Budgets (HL)
      • Unit 4 Marketing
        • U4.1 The role of marketing
        • U4.2 Marketing planning
        • U4.3 Sales forecasting (HL)
        • U4.4 Market research
        • U4.5 The 4 Ps (product, price, promotion, place)
          • U4.5.1 Product
          • U4.5.2 Price
          • U4.5.3 Promotion
          • U4.5.4 Place
        • U4.6 The extended marketing mix of seven P's (HL)
        • U4.7 International marketing (HL)
        • U4.8 E-commerce
      • Unit 5 Operations
        • U5.1 The role of operations management
        • U5.2 Production methods
          • U5.2.1 Job production
          • U5.2.2 Batch production
          • U5.2.3 Mass production
          • U5.2.4 Cellular manufacturing
          • U5.2.5 Changing production method
          • U5.2.6 Choosing production method
        • U5.3 Lean production and quality management (HL)
          • U5.3.1 Methods of lean production
          • U5.3.2 Cradle-to-cradle design and manufacturing
          • U5.3.3 Quality control and quality assurance
        • U5.4 Location
          • U5.4.1 Factors in locating a business
          • U5.4.2 Impact of globalisation on location
          • U5.4.3 Outsourcing and offshoring
        • U5.5 Production planning (HL)
        • U5.6 Research and development (HL)
        • U5.7 Crisis management and contingency planning (HL)
    • IA
      • IA1 Overview
      • IA2 SL Written Commentary
        • IA2.1 IA criteria - SL
        • IA2.2 Sample IAs
      • IA3 HL Research Project
        • IA3.1 IA criteria - HL
        • IA3.2 Sample IAs
      • IA4 Tips and checks
    • EE
      • EE1 Overview
      • EE2 Choice and treatment of topic
      • EE3 Assessment Criteria
      • EE4 Examples
    • Skills
      • S1 Research
      • S2 Business tools

Previous

U1.6.5 Multinational companies

Next

Lesson aims

  • Discuss reasons for the growth of multinational companies (MNCs).
  • Examine the impact of MNCs on host countries.

Multinational companies (MNCs) are corporations that operate in at least two countries, one of which is outside the corporation's 'home' country.

Factors leading to the rise of MNCs

Positive impacts of MNCs on host countries

  • Employment opportunities
  • Transfer of skills and technology
  • Supply chain opportunities for local businesses
  • Infrastructure developments
  • More diverse and better product choices
  • Government taxes and foreign currency earnings from the initial investment and from the sales of exported goods

Negative impacts of MNCs on host countries

  • Limited commitment to the local workforce
  • Lack of adherence to pollution control and protection of the environment.
  • Demands of multinationals for local goods and services to conduct their business can drive up prices.
  • Take business away from local companies or even lead to their disappearance
  • Unhealthy dependence upon a single multinational, which can destabilise the local economy and make it overly vulnerable to decisions taken thousands of miles away

Case study - Milk production in Punjab

The 'white revolution' in Punjab, India, is an example of the complex relationship between multinationals and host countries. The white revolution refers to the replacement of traditional cultivation of wheat-paddy crops by dairy farming. This change was encouraged by the government, as it held the promise of improved profit margins for farmers.

The transition was accelerated by several multinationals that source milk in the region, including Nestlé, Danone, and GlaxoSmithKline. These companies have contributed to the development of milk production by providing infrastructure, like communal chilling facilities, that allow farmers with only a few cows access to refrigeration needed to conserve milk.

The development of the dairy industry in Punjab has recently become more controversial, as the region has experienced drought conditions. Raising and feeding cows requires enormous amounts of water, and farmers are using up groundwater supplies faster than they are replenished. The multinationals are working with local farmers to face up to these challenges through education and water management programs. Nonetheless, it is uncertain whether in the longer term the 'white revolution' will be seen as a positive or negative for the region.

  1. Analyse the impact the white revolution may have had on farmers in Punjab.
  2. Discuss the potential impact of the white revolution on multinationals’ stakeholders in the region.

Tasks

  1. What is the impact of the national culture on the operations of a MNC?
  2. How does globalisation impact the host countries and what is the impact of MNCs on local communities?
  3. How can MNCs adjust their strategy in order to achieve growth in developing countries?
  4. To what extent is it possible for outside observers to understand and evaluate the impact of multinational corporations operating in developing countries?
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