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29 Nov 2019

What are some of the key criticisms of MNCs by NGOs? How have MNCs responded to these?

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Reid Wolff
Reid WolffLv2
17 Dec 2019
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Related questions

About Vietnam's economic outlook (Please answer these question)

1. In what way does the political environment in Vietnam pose both an opportunity and a threat for American MNCs seeking to do business there?

2. Why are U.S. multinationals so interested in going into Vietnam? How much potential does the country offer? How might Vietnam compare to China as a place to do business?

3. Will there be any opportunities in Vietnam for high-tech American firms? Why or why not?

1. GE’s mission statement reads: “GE imagines things others don’t, builds things others can’t and delivers outcomes that make the world work better. GE brings together the physical and digital worlds in ways no other company can. In its labs and factories and on the ground with customers, GE is inventing the next industrial era to move, power, build and cure the world.” 1. Does it surprise you that a global corporation would have an agenda to “cure the world”? a. What are some of the ways GE is aiming to achieve this? b. Discuss at least two GE programs and how they can make the world a better place for everyone, as well as increase profitability. c. What are some of the criticisms of GE’s Ecomagination program? d. Identify at least two concerns regarding the program. e. Do you agree that these are legitimate concerns? f. How can GE overcome these criticisms? g. How can supranational organizations like the WTO, governments, NGOs (non-governmental organizations) and businesses work together to create sustainable international trade? Provide at least two strategies or methods in your reply.

POINT: Yes. Studies have shown that exchange rate movements are related to inflation differentials in the long run. Based on PPP, the currency of a high-inflation country will depreciate against the dollar. A subsidiary in that country should generate inflated revenue from inflation, which will help offset the adverse exchange effects when its earnings are remitted to the parent. If a firm is focused on long-term performance, the deviations from PPP will offset over time. In some years, the exchange rate effects may exceed the inflation effects, and in other years the inflation effects will exceed the exchange rate effects.

COUNTER-POINT: No. Even if the relationship between inflation and exchange rate effects is consistent, this does not guarantee that the effects on the firm will be offsetting. A subsidiary in a high-inflation country will not necessarily be able to adjust its price level to keep up with the increased costs of doing business there. The effects vary with each MNCs situation. Even if the subsidiary can raise its prices to match the rising costs, there are short-term deviations from PPP. The investors who invest in an MNCs stock may be concerned about short-term deviations from PPP because they will not necessarily hold the stock for the long term. Thus, investors may prefer that firms manage in a manner that reduces the volatility in their performance in short-run and long-run periods.

Which argument is better? Explain

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