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What do all these
companies have in
common?
Lesson 3- OUTLINING THE
ROLE TNCs PLAY IN
CREATING A MORE
GLOBALISED WORLD
TNC- WHAT?
 A TNC is a
This means that a COMPANY HAS BRANCHES IN MORE THAN
ONE COUNTRY
THERE ARE MANY OF THESE COMPANIES WE ARE ALL FAMILIAR WITH
WHAT IS A TNC?
 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 of fices 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.
 Other TNCs like, use assembly industries - making dif ferent
parts of the product in dif ferent countries, than assembling it
in another, this means more countries make money from one
company
http://www.youtube.com/watch?v=pCEF0xG
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
WHY DO TNC’S CHOSE TO MANUFACTURE IN
DEVELOPING COUNTRIES?
 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 worker s in NIC’s, the
cost of manufacturing is reduced and the profit that the company makes
increases.
 Long Working Hour s - in NIC’s the rules regarding the hour s of work are ver y
relaxed. This means that employees will have longer hour s 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 of ten not enforced. This
lower s 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 worker s are consistent.
 Tax Incentives & Tax Free Zones - Some NIC’s of fer 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 par ticular area. This is good for the TNC because they
pay less in taxes and gain more in profit.
Rank
Company
HQ
Industry
Revenue
$bn
1
Exxon-Mobil
USA
Oil
377
2
Wal-Mart
USA
Retailing
351
3
BP
UK
Oil
318
4
Shell
UK/
Netherlands
Oil
274
5
General
Motors
USA
Cars and
vehicles
207
Annual 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?
Annual income ( GDP)
of selected countries.
Country
Total annual income for country
GDP ( $bn)
Sweden
444
Greece
360
South Africa
277
Malaysia
180
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
CARDSUMMARISE THE
KEY POINTS
2) SOME
STATEMENTS
CAN FIT IN MORE
THAN ONE BOX
TASK
 In small groups write responses to the 2 essay questions
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.”
RECAP
 How do TNCs create a MORE GLOBALISED WORLD? (4)

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