Controlling MNCs — Edexcel A-Level Business
Test yourself on Controlling MNCs with PEARSON EDEXCEL A-Level practice questions.
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Controlling MNCs explained
A multinational is held in check by four levers of very unequal strength, and the exam wants a ranking of them for the business in front of you.
Read the full explanation
Governments set tax, planning and employment rules and can refuse market access, yet they also compete for the jobs and investment a large firm brings, which weakens their hand. Law is national while the firm is global, so profit can be routed through low tax jurisdictions and production shifted to lighter regimes. Campaign groups and ordinary customers organise more slowly but damage faster, as Greenpeace showed when its campaign over palm oil in Nestle products forced a sourcing change within weeks. Strength depends on the firm's size, its visibility and how badly the host country needs it.
Your focus
- a) Factors to consider: political influence; legal control; pressure groups; social media
Controlling MNCs exam tips
Marking Points
- Weighing each lever rather than listing it, so explaining that a host government's leverage falls as its need for foreign direct investment rises.
- Using scale as evidence, that the revenue of a large multinational can exceed the national income of the country trying to regulate it, to explain why legal control is often partial.
- Explaining how social media changes the speed of pressure, turning a local incident into a global boycott in days and hitting revenue long before any court or regulator acts.
- Applying it to the named firm, since a consumer facing brand fears a boycott while a business selling components to other businesses is far less exposed to one.
Examiner Tips
- 💡This closes the global unit and usually appears as the extended essay, so the conclusion must rank the factors for the business given rather than restate all four.
- 💡Bring in one real campaign or one real competition fine as brief evidence, then return quickly to the case study rather than writing a news report.
- 💡Link back to stakeholders and to the ethics material in the same section, because control is best explained as the response to the behaviour taught there.
Common Mistakes
- Treating the host government as all powerful, ignoring tax competition, transfer pricing and the standing threat to relocate production elsewhere.
- Describing a pressure group campaign without saying what it cost the business in sales, share price or management time.
- Assuming every multinational is equally vulnerable, when exposure depends on brand visibility and on how easily customers can switch to a rival.