TNC’S LO: To assess the roles of TNC’s in globalisation KW: 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
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?
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 a McDonalds in Tokyo to "enjoy the American way of life and food." Bad globalisations when she gets off a plane in Los Angeles and is surprised that "they have McDonalds in America, too!" The little girl should be aware that McDonalds is not a part of the Japanese culture.” “Think Global, act Local!”
Bridge Building between nations TNCs can act as an important social political and economic stepping stone between two nations. Google’s move into China initially suggested a new wave of American/Chinese cooperation. Yet the collapse of the arrangement actually led to international condemnation of the Chinese led by the 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: Diageo Diageo, 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 assembly industries, reliant on a chain of suppliers from all over the world. The BMW Mini cooper factory in Oxford has 2500 different suppliers, ranging from the EU to engine pieces coming from a part owned factory in Brazil.
The “Invisible Hand” Adam Smith argued that globalisation only occurred as a result of the need to deliver produce from companies to their customers acting as the “Invisible hand.” Without TNC’s he argues that globalisation would have occurred at a much slower rate.
Manipulation Honda had only a limited number of cars it could import to the UK. However, by locating a Factory in Swindon there is no restriction to the number of cars it can sell as they are being made in the UK. Smaller companies would not have the financial capability to do 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?