TNC Research You need to know a case study of a TNC: Who are they? What do they do? When did they set up? Brief company background (don’t copy & paste!) Employment data and turnover data. What is made/ produced/ sold? Where do they operate? Global network: map and description to show where they operate (factories, HQ’s, shops) Why did they set up here? Explain reasons for location of HQ & factories How have they had an impact on the world? What is good/positives? What is bad/negatives? Consider economic, social and environmental impacts. Host and source country. How has the TNC had an impact on global trade, wealth and development?

which operates and has ownership of assets in more than one country. A transnational corporation (TNC) is simply a large business organisation which operates and has ownership of assets in more than one country. Who am I?

Toyota

How do TNC’s impact the world? Evaluate the impacts caused by TNC’s and suggest their significance on global trade and the development of countries Know – what TNC’s are Understand – how they have an impact on global trade and development B Explain the impacts of TNC’s and analyse how they affect global wealth C-D Describe what a TNC is, using a case study, and consider how they have accelerated globalisation

How do TNC’s impact the world? What is a TNC? A TNC or Trans National Corporation is a company that has operations in more than one country. They have grown by buying up foreign firms in mergers and acquisitions. Eg. Kraft buying Cadbury Much of their manufacturing is subcontracted. They link together groups of countries through the production of goods (most manufacturing TNCs are ‘assembly industries’). They also forge connections between people in different countries by shaping common patterns of consumption.

How do TNC’s impact the world? To be closer to their separate markets (these may need to be served differently, depending on cultural needs – ‘glocalisation’) To operate where labour is cheaper and less regulated e.g. Pay below minimum wage. Reasons for the global nature of TNCs To spread the risk (e.g. Those associated with industrial action or crop failure). To operate inside local trade barriers, such as tariffs and quotas increasing profits. Why do TNCs exist? Global markets exist for many products and services and those organisations with sufficient capital and expertise have established branches or affiliates in new countries. TNCs usually establish overseas branches in order to: • Gain access to new markets • Extend existing markets to match competitors • Provide export platforms • Avoid trade barriers • Diversify production • Reduce production costs e.g. by gaining access to cheaper labour • Exploit economies of scale in order to out-compete smaller national, regional and local manufacturers All of this has been hugely accelerated by cheap and efficient global communication networks which have allowed organisations to control the activities of dozens of affiliates via one head office - usually in a developed country - where management, marketing and research and development expertise is concentrated. TNCs have achieved vertical integration - where a business buys its suppliers or customers in order to increase control over them. When any particular organisation's customers or suppliers are in another country, then this organisation will automatically become a TNC. To gain grants and other rewards from national governments who are trying to attract inward investment.

How do TNC’s impact the world? How do they affect global wealth? TNCs bring Foreign Direct Investment to nations – even if wages are low workers will still spend money after they have been paid = stimulates growth of other local services When TNCs locate in a trade bloc they bring wealth to poorer regions as they often source parts locally One of the most effective mechanisms for wealth redistribution

How do TNC’s impact the world? Many TNCS have both positive and negative impacts on the global market place. Sort the statements into Positive ( + ) or negative (-) impacts of TNC’s Decide if they are Social, Environmental, Economic, Political factors Would this have a bigger impact in the source or host country? READ PAGE 107 In Phillip Allen

How do TNC’s have an impact on the environment? How will this impact on global trade and development of countries? Do you think they have a + or – impact on the environment?

Bhopal,India One of the greatest Environmental disasters took place on 2nd December 1984 when toxic gas leaked from a Union Carbide factory killing between 3,800 and 15,000 people. http://search.bbc.co.uk/cgi-bin/search/results.pl?tab=av&q=bhopal&recipe=all&scope=all&edition

How do TNC’s impact the world? Explain the negative impacts of TNC’s. Explain the positive impacts of TNC’s. Judge whether TNC’s have a bigger positive or negative impact on the world. Examine how TNC’s have an impact on the distribution of global wealth and trade. Suggest how TNC’s have an influence on the economic development of countries. Decide how significant TNC’s are in the world. What if TNC’s didn’t exist? READ PAGE 107 In Phillip Allen

Glocalisation: The adaptation of a global product for a local market place. Globalisation: The spread of economic, cultural and social ideas across the world. Localisation: The act of operating locally in terms of employees, product, supply of raw materials, etc.

What are you going to include? Definition of key term Reason(s) Explanation(s) Example of company/product and where

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