Where am I?
Transnational Corporations (TNC’s)
Transnational Corporations (TNC’s)
• TNC’s help to build bridges between nations. • TNC’s nothing new as the British Empire has been linking
people and places, e.g. The East India Company. • Some key characteristics of TNC’s are;
– That they build their business up through buying other companies (mergers and acquisitions) E.g. Jaguar is owned by Tata.
– Manufacturing is subcontracted to third parties (hard to enforce environmental standards)
– Manufacturing is more about assembly industries. I.e. the company (e.g. Jaguar) simply assemble what other people have made for them.
Transnational Corporations (TNC’s)
• Turn to p104 and copy out the key terms;– Branch Plants – Consumption– Glocalisation – Parent Company – Tertiary Sector
Pro TNC
Improved living standardsthrough minimum wage
Technology Transferspecific to markets
Political Stabilityaided by economic stability
Increasing Environmental Awareness
Coorporate images and green credentials
Anti TNC
Tax Avoidance – due to Concessions, so
governments struggle to raiserevenue
Limited LinkagesLocal firms not used, business
men com in from overseas
Environmental DegradationBhopal, India 1984
Union Carbide (USA) plant emitted poisonous gases leading to
the death of thousands
Increasing Wealth DivideInvesting in Asia and not Africa
TNC’s create new haves and have nots
Costs Benefits Host country
• Profits go to the HQ country
• Tax avoidance • Workers are paid low
wages and may be exploited
• Health and safety may be ignored
• Environmental impacts may be large
• Rise in Living Standards• Job creation• Supplier companies and
linked industries may grow
• Creates connections with the rest of the world
• Political stability
Source country
• Loss of jobs due to global shift
• Derelict land due to factory closures
• The costs of regeneration
• Dirty industries and pollution are ‘exported’
• TNCs may generate greater profits and pay more taxes
Host and source costs and benefits
TNC’s and Global WealthWorld’s top five TNCs (2006) TNC
2006 GDP of selected nations
TNC Revenue ($bn)
Country GDP ($bn) Rank
Exxon Mobil 377 Thailand 206 34
Wal-Mart 351 Nigeria 115 48
Royal Dutch/Shall
318 Pakistan 128 45
BP 274 Bangladesh 65 57
General Motors
207 Zimbabwe 5 131
TNC: Case Study Tesco
Your turn
• Using Tesco as a case study (p105-6) produce a mind map on this case study.
• Include;– Facts– Does Tesco exploit or look after its workers?– what are both the costs and benefits of Tesco for
host and source countries.