MULTINATIONAL / TRANSNATIONAL COMPANIES

MNCs / TNCs

Suitable definition ?

There are various issues which are related to MNCs and the impact that they have on the economy.

• Need to consider the scale of global investment which is in the hands of, and controlled by, MNCs - just 1% of companies controlling around 50% of investment
• They have influenced the change in the international division of labour.
• The MNCs form a power base in the core companies which are located in the USA and EU.
• MNCs dominate world markets and have very large scale operations away from the host country
• MNCs are present in every continent
• They occupy an important position in areas of the world where economies are rapidly growing, such as the Pacific Rim
• There is some controversy about the use of cheap labour and reduced labour legislation, with stories of sweatshops and poor working conditions.
• They have strong bargaining position with governments, and can often negotiate favourable conditions for entry into countries.
• MNCs are responsible for multiplier effects

Need to develop some case studies:

1. SWOT ANALYSIS

Why not consider the various benefits of MNCs or TNCs on the host countries, and for the companies themselves.

Here are some suggestions to get you started:

BENEFITS FOR MNCs of LOCATING IN OTHER COUNTRIES (particularly ELDCs)

Lower labour costs

Raw materials often available for use

Improvements made in infrastructure

Government incentives

EFFECTS OF MNC on HOST country (Positive)

Jobs created

Improvements made to infrastructure to supply the MNCs factories - these can then improve the quality of life for people who are not necessarily employed by MNC

Company can transfer its knowledge by training employees

Industrial parks in places like Singapore and Malaysia can attract more investment.

EFFECTS OF MNC on HOST country (Negative)

Branch plants first to be closed down if the host company experiences problems

Competition for local businesses may result in them closing down

NIKE

Obviously the company's site is at NIKE.

It has details on 4 sections of the geographical locations: Europe, North America, South America and S.E Asia

Copy and paste the following ID to get the page which has the CORPORATE RESPONSIBILITY report that was recently (2005) released. This goes a long way towards answering concerns that people have about the use of labour in Nike factories.

It contains over 100 pages of information about the company.

http://www.nike.com/nikebiz/nikebiz.jhtml;bsessionid=QVPOHDXOZ5GN4CQCGJECF4YKAIZEUIZB?page=29&item=fy04

Nike has listed plants in various countries, the locations of which have previously been kept secret.

The company employs 650 000 contract workers worldwide.

Article in 'The Guardian' on 14th April 2005 on the report was useful.

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