The Transnational Company

The Transnational Company

Define TNCDescribe aimsExplain the economic sectors.Explain the function of services and manufacturing

A TNC...

TNCs control and co-ordinate economic activities from other countries and develop trade between the same corporation in different countries.

Hi-tech?Large volume consumer goods?Mass produced consumer goods?Service operations?

Reducing Costs Increasing Sales

The aims of a TNC are to make more profit...

TASK: Sort the cards into the correct sections of the VEN diagram.

ECONOMIES OF SCALE

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External Economies of Scale – Manufacturing TNCs.

Localisation Economies...

Urbanisation Economies...

Purchasing materials or goods in the local area to reduce costs e.g. Transport and using just in time tactics.

Lower costs with being in urbanised areas allowing the manufacturing to link with the service industries – many outsource to smaller companies saving start up costs.

TNCs and Globalisation

TNCs serve a global market and they can globalise their operations in a number of ways.

• By producing just for a country that the plant is situated in.

• Producing in a number of countries.• Integrate production – each plant performs a

separate function.

Which do you consider to be the most effective and WHY..?

Shifting patterns?

Why invest in the service industry?

• Processes of liberalisation and deregulation of services – flows of FDI into industries previously under state control.

• ICT revolution – investment in tradable services with instant communication.

• Splitting of components – meaning that services can globalise in the way manufacturing did in the past.

The Transnational Company

Define TNCDescribe aimsExplain the economic sectors.Explain the function of services and manufacturing