Presentation on theme: "Transnational Companies."— Presentation transcript:
1Transnational Companies. Transnational companies ( TNCs) or multinational companies ( MNCs) are big.There are many of them and they operate in more than one country around the world. They have headquarters in one country and offices and factories in others.
2These are the top five transnational companies by income in the world. What do they make?
3Total annual income for country RankCompanyHQIndustryRevenue$bn1Exxon-MobilUSAOil3772Wal-MartRetailing3513BPUK3184ShellUK/Netherlands2745General MotorsCars and vehicles207Annual turnover for top five transnational companies.Compare the income of the top five transnational companies with the countries listed in the table below. What do you notice?CountryTotal annual income for countryGDP ( $bn)Sweden444Greece360South Africa277Malaysia180Annual income ( GDP) of selected countries.
4To sell inside trade barriers To be close to marketsTo find cheap labourREASONSFORGOINGGLOBALTo sell inside trade barriersTo spread industrial risksTo take advantage of incentives
5Transnational Companies such as General Motors bring advantages and disadvantages to the countries where they locate. Sort the statements into advantages and disadvantages of transnational companies for host countries.
6Advantages and disadvantages of TNC’s for host countries. Brings work to the country and uses local labourMechanisation reduces the size of the labour forceLocal labour force usually poorly paidVery few local skilled workers employedPrestige valueLocal workforce receives a guaranteed incomeMost of the profits go overseas (outflow of wealth)Improvements in roads, airports and servicesImproves levels of education and technical skill of the peopleNumbers employed small in comparison with amount of investmentIncreased Gross Domestic Product/personal income can lead to an increase demand for consumer goods and the growth of new industriesGNP grows less quickly than that of the parent company’s HQ, widening the gap between developed and developing countriesBig schemes can increase national debtCompanies provide expensive machinery and modern technologyMoney possibly better spent on improving housing, diet and sanitationDecisions are made outside the country, and company could pull out at any timeBrings welcome investment and foreign currency to the countryLeads to the development of mineral wealth and new energy resourcesSome improvement in standards or production, health control, and recently environment controlInsufficient attention to health and safety factors and the protection of the environmentMinerals are often exported rather than manufactured and energy costs may lead to a national debtWidens economic base of countryAdvantages and disadvantages of TNC’s for host countries.
7This map shows the numbers employed by General Motors around the world This map shows the numbers employed by General Motors around the world. It has its headquarters in Detroit USA but has factories around the world.
8What reason is given by General Motors for the closure of the car assembly plant at Luton. Complete the table below to show the economic and social effects the loss of jobs at the Vauxhall factory might have had on the Luton area.Economic EffectsOf the closureSocial Effects of the closure
9Transnational companies ( TNCs) affect the countries where they locate their factories. Choose a TNC you have studied.Explain the advantages and disadvantages the TNC hasfor a country or countries where it has factories.( 8 marks )