Lesson 3- OUTLINING THE ROLE TNCs PLAY IN CREATING A MORE GLOBALISED WORLD What do all these companies have in common?

 A TNC is a This means that a COMPANY HAS BRANCHES IN MORE THAN ONE COUNTRY TNC- WHAT? THERE ARE MANY OF THESE COMPANIES WE ARE ALL FAMILIAR WITH

 Definition: A Transnational company/corporation (TNC) is simply a company that produces and sells its products in different countries.  TNC’s increase globalisation by linking together countries through the production & sales of goods.  TNC’s offices and headquarters are usually located in MEDC’s because people have better education and administrate skills.  TNC’s Factories are usually located in DEVELOPING COUNTRIES as labour is cheaper which means producing goods will be less costly and the company will gain more profit. WHAT IS A TNC?

 Other TNCs like, use assembly industries- making different parts of the product in different countries, than assembling it in another, this means more countries make money from one company B64ohttp:// B64o the impact on the car industry.

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.

The company sells over 400 brands in over 312 countries or territories. 90 billion servings of Coke’s products are consumed each day

 Cheap labour- In NIC’s there is a much smaller minimum wage than in MEDC’s like the UK. As the company pays less to its workers in NIC’s, the cost of manufacturing is reduced and the profit that the company makes increases.  Long Working Hours- in NIC’s the rules regarding the hours of work are very relaxed. This means that employees will have longer hours and the company will produce more yield in a day.  Laxer health & safety Regulations- in NIC’s there are fewer health & safety regulations due to lack of education and they are often not enforced. This lowers the cost of manufacturing as in a MEDC a company would spend out money to increase the working conditions.  Prohibition of Strikes- Some NIC’s do not allow employees to strike over things like pay and poor working conditions. This means that money isn’t lost as the workers are consistent.  Tax Incentives & Tax Free Zones- Some NIC’s offer a tax reduction to TNC’s who move their manufacturing to their countries. Some NIC’s also have tax free zones which means the TNC’s don’t have to pay taxes to move their manufacturing to a particular area. This is good for the TNC because they pay less in taxes and gain more in profit. WHY DO TNC’S CHOSE TO MANUFACTURE IN DEVELOPING COUNTRIES?

RankCompanyHQIndustryRevenue $bn 1Exxon-MobilUSAOil377 2Wal-MartUSARetailing351 3BPUKOil318 4ShellUK/ Netherlands Oil274 5General Motors USACars and vehicles 207 CountryTotal annual income for country GDP ( $bn) Sweden444 Greece360 South Africa277 Malaysia180 Annual turnover for top five transnational companies. Annual income ( GDP) of selected countries. Compare the income of the top five transnational companies with the countries listed in the table below. What do you notice?

TASK –POSITIVES AND NEGATIVES OF TNCS  Using the information stuck on the walls around the room  Fill in your copy of the table Advantages of TNCs Disadvantages of TNCs Effects on country of origin Effects on host country Social factors Environmental factors Economic factors TOP TIPS 1) DO NOT COPY ALL THE INFORMATION FROM EACH CARD- SUMMARISE THE KEY POINTS 2) SOME STATEMENTS CAN FIT IN MORE THAN ONE BOX

 In small groups write responses to the 2 essay questions TASK Use the statements to help you construct an answer to the following essay questions; “TNCs have had a positive impact on the level of development in both developed and developing countries. Discuss.” “TNCs have proved socially, economically and environmentally destructive in both developed and developing countries. Discuss.”

 How do TNCs create a MORE GLOBALISED WORLD? (4) RECAP