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Assess whether legal controls are the most effective way of controlling the actions of multinational companies in countries, such as Brazil. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Question 2
Assess whether legal controls are the most effective way of controlling the actions of multinational companies in countries, such as Brazil.
Worked Solution & Example Answer:Assess whether legal controls are the most effective way of controlling the actions of multinational companies in countries, such as Brazil. - Edexcel - A-Level Business - Question 2 - 2022 - Paper 1
Step 1
Legal controls include the use of legislation and government policies
Answer
Legal controls are essential in managing multinational companies. They encompass laws regulating advertising, the sale of sugary and fatty foods, and other policies aimed at promoting public health. For example, Brazil has previously implemented regulations that restrict advertising aimed at children, which can influence how companies like KFC and Pepsi communicate their products.
These regulations often require companies to adapt their advertising strategies, potentially limiting their traditional marketing practices that may encourage unhealthy eating habits.
Step 2
The Brazilian government has used legal controls in its control of advertising
Answer
The Brazilian government’s actions in regulating multinational companies also highlight their ability to enforce controls effectively. For instance, laws surrounding the marketing of unhealthy foods could lead to changes in product formulation, demanding companies to revise how they market their offerings to comply with national standards. However, this only works if the laws are genuinely enforced.
Step 3
However, legal controls can only be effective if they are enforced
Answer
Legal controls may not be the ultimate solution if enforcement is weak. For instance, the presence of loopholes or ineffective monitoring may allow multinational corporations to circumvent regulations. In Brazil, the challenge often lies in the execution of these laws, where compliance may depend on the accountability of local branches of multinational firms.
Step 4
Potential counterbalance
Answer
Despite regulatory efforts, companies can pivot by adjusting their strategies in other markets. Multinationals usually operate in multiple regions; if Brazil's regulations become too stringent, they might scale back their operations there or shift their focus to growing markets with fewer restrictions. This business agility can minimize the impact of legal measures if enforcement does not consistently match the regulatory environment.
Step 5
Potential judgement
Answer
While legal controls play a significant role in regulating multinationals, their effectiveness is contingent upon rigorous enforcement and the broader context of the market. If multinational companies perceive regulations as a hindrance, they may prioritize markets where they face fewer legal constraints. Thus, it's crucial to integrate various forms of control, including public pressure and cooperation from citizens and organizations, to ensure a holistic approach.