TNC’S

LO: To assess the roles of TNC’s in globalisationKW: TNC, Location, Business

Rescuers were frantically searching for survivors after at least 200 workers were killed and hundreds

more injured when an eight-storey complex, housing a factory that supplies Primark and

Bonmarche, collapsed in the Bangladeshi capital.

• Four garment factories occupied six of the eight floors. New Wave Style, the largest of the factories, lists international retailers like Benetton along with British high street names like Primark, Matalan and Bonmarche among its main buyers.

• Primark confirmed that "one of its suppliers occupied the second floor" of the building. The company added that its "ethical trade team" was "working to collect information, assess which communities the workers come from, and to provide support where possible".

• Benetton denied that “people involved in the collapse of the factory” were its suppliers. A statement from Matalan said: “We can confirm that New Wave has been a supplier to Matalan although we don’t have any current production with them. We are deeply saddened by the news and we have been trying to get in touch with our contacts since we heard to check if we are able to assist.” The last time New Wave supplied Matalan was in February, a spokesman added.

• A Bonmarche spokesman confirmed that it used New Wave as a supplier: "We are terribly shocked by the news from Bangladesh and our thoughts are with the victims of this terrible tragedy and their families. We can confirm that New Wave is a supplier to Bonmarche and we are currently in touch with our agents

http://www.bbc.co.uk/news/world-asia-22305305

Starter

• Design your own TNC• What are the advantages to your company

being transnational

3 Minutes in your groups

In what ways do TNC’s impact on globalisation?

How have TNC’s aided globalisation?TNC How? Example?

• Customising the product to meet indigenous tastes may also aid its integration into local markets

• Cadbury’s Chocolate, who have significantly changed their chocolate recipe in China to appeal to local tastes – reducing the sugar content but increasing cocoa levels.

Good globalisation is when a little Japanese girl goes to aMcDonalds in Tokyo to "enjoy the American way of life andfood." Bad globalisations when she gets off a plane in LosAngeles and is surprised that "they have McDonalds in America,too!" The little girl should be aware that McDonalds is not a partof the Japanese culture.”

“Think Global, act Local!”

Bridge Building between nations

TNCs can act as an importantsocial political and economicstepping stone between twonations.

Google’s move into Chinainitially suggested a new waveof American/Chinese cooperation.Yet the collapse of the arrangementactually led to internationalcondemnation of the Chinese led bythe USA.

Engaging society with the economy

• The population of a country is connected with its economy through businesses supply chains and marketing strategies. Ultimately, by consuming products from these businesses, people are connecting to the global market and systems.

• This is also an opportunity for companies and nations to spread their influence on a wider scale.

Alcatel was one of the first companies to move back into Iraq after the first Gulf War. The communications company is now one of the largest operators in Iraq and was vital in re-engaging the Iraqi people with its economy.

Business Acquisition: DiageoDiageo, a British Alcoholic drinks producer has expanded its business by ascertaining other businesses, such as Smirnoff and Captain Morgan.

They are able to do this as a result of globalisation.

By buying these businesses they are expanding their potential consumer base and global influence.

The once small British Diageo company is now operating on a global scale as a parent company to smaller businesses.

Aids the continued growth of the “Development Gap”

Large companies often sub-contract manufacturing, handing responsibility onto a third party.

This third party will attempt to perform the operation at the lowest cost to ensure they maintain their relationship with the parent company.

The pursuit of profit often means that corners will be cut and moral obligations ignored: TNC’s are therefore contributing to global trends of disparity (rich vs. poor)

e.g. Next: Recently caught selling goods made in Indian sweatshops by Children. They had handed responsibility for production to a third party.

Assembly Production

Some TNCs are assemblyindustries, reliant on a chain ofsuppliers from all over theworld.

The BMW Mini cooper factoryin Oxford has 2500 differentsuppliers, ranging from the EUto engine pieces coming from apart owned factory in Brazil.

The “Invisible Hand”

Adam Smith argued that globalisation onlyoccurred as a result of the need to deliverproduce from companies to their customersacting as the “Invisible hand.”

Without TNC’s he argues that globalisationwould have occurred at a much slower rate.

ManipulationHonda had only a limited numberof cars it could import to the UK.

However, by locating a Factory inSwindon there is no restriction tothe number of cars it can sell asthey are being made in the UK.

Smaller companies would nothave the financial capability todo this.

Primark• How can Primark have the lowest prices on the high street?• Primark can afford to offer their customers low prices by

utilising a number of cost saving strategies. They have no advertising costs. instead relying on their customers “doing the talking”.

• They buy and sell in bulk - Primark has over 210 stores in Ireland, Spain, the United Kingdom, Holland, Spain, Germany, Portugal and Belgium.

• Their buying power allows them to buy in bulk and pass the cost savings back to the customer.

• They keep their overheads low wherever they can.

H/W• Research and write about a TNC of your choice• You need to:• Visit it’s website and complete a case study on location of

it’s head office, where it operates and types of business that it undertakes

• You also need to see if the TNC has any positive or negative impacts

• THIS IS IN YOUR BOOKS. YOU MUST WRITE THE CASE STUDY UP

• IT IS NOT GOOD ENOUGH TO JUST PRINT SOMETHING OFF THEN STICK IT IN!

• A SUGGESTED FRAME IS ON THE NEXT SLIDE

TNC CASE STUDY• Name:• Location of HQ:• Countries of operation:• Type of business:• Positive Impacts: (Written in full sentences)

• Negative impacts: (Written in full sentences)

• THIS SHOULD BE AT LEAST HALF A PAGE IF NOT MORE. REMEMBER TO RESEARCH ANY NEGATIVE IMPACTS, SO FOR PRIMARK THE MOST RECENT ONE WOULD BE THE FACTORY COLLAPSE IN BANGLADESH

• IN FULL SENTENCES

Possible TNC’s to research

• Coca-Cola

• Apple.

• McDonald's Corporation

• Nike

• BP

• Shell

• Primark

Exit Pass

• How significant are TNC’s to globalisation?