Transnational Companies.

Transnational companies ( TNCs) or multinational companies ( MNCs) are big.There are many of them and they operate in more than one country around the world. They have headquarters in one country and offices and factories in others.

These are the top five transnational companies by income in the world.

What do they make?

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

Country Total annual income for countryGDP ( $bn)

Sweden 444

Greece 360

South Africa 277

Malaysia 180

Annual turnover for top five transnational companies.

Annual income ( GDP) of selected countries.

Compare the income of the top five transnational companies with the countries listed in the table below. What do you notice?

To be close to markets

To find cheap labour

To sell inside trade barriers

To take advantage of

incentives

To spread industrial risks

Transnational Companies such as General Motors bring advantages and disadvantages to the countries where they locate.

Sort the statements into advantages and disadvantages of transnational companies for host countries.

Brings work to the country and uses local labour

Mechanisation reduces the size of the labour force

Local labour force usually poorly paid Very few local skilled workers employed

Prestige value Local workforce receives a guaranteed income

Most of the profits go overseas (outflow of wealth)

Improvements in roads, airports and services

Improves levels of education and technical skill of the people

Numbers employed small in comparison with amount of investment

Increased Gross Domestic Product/personal income can lead to an increase demand for consumer goods and the growth of new industries

GNP grows less quickly than that of the parent company’s HQ, widening the gap

between developed and developing countries

Big schemes can increase national debt Companies provide expensive machinery and modern technology

Money possibly better spent on improving housing, diet and sanitation

Decisions are made outside the country, and company could pull out at any time

Brings welcome investment and foreign currency to the country

Leads to the development of mineral wealth and new energy resources

Some improvement in standards or production, health control, and recently

environment control

Insufficient attention to health and safety factors and the protection of the

environment Minerals are often exported rather than

manufactured and energy costs may lead to a national debt

Widens economic base of country

Advantages and disadvantages of TNC’s for host countries.

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.

1. What reason is given by General Motors for the closure of the car assembly plant at Luton.

2. Complete the table below to show the economic and social effects the loss of jobs at the Vauxhall factory might have had on the Luton area.

Economic EffectsOf the closure

Social Effects of the closure

Transnational companies ( TNCs) affect the countries where they locate their factories. Choose a TNC you have studied. Explain the advantages and disadvantages the TNC has for a country or countries where it has factories.

( 8 marks )