Transnational Corporations

Jamie Z 2024-06-09

Learning Goals

• Describe the characteristics of a translational corporation
• Explain the TNC’s role in the global economy
• Explain how TNC’s operate in the global supply chain
• Explain how TNC’s maximise profit

Transnational Corporations

TNC’s are business enterprises that operate in more than one country

Characteristics

1. Structure - May be public companies or privately owned (or both), Aims to maximise profits for shareholders
2. Workforce - Employ a large global (often temporary) workforce throughout complex supply chains, Highly skilled executives move freely between countries
3. Profits - Make huge profits often in excess of the incomes of less economically developed countries
4. Products - Produce well-known global brands that are highly standardised

Complex Global Supply Chains

A supply chain refers to the journey of a product or raw material from its source to the consumer

1. Upstream

• Research and development of a product
• Supply of raw materials/components

2. Manufacture

• Involves all the steps of turning raw materials/components into sellable goods

3. Downstream

• Working with the distributors to get the end product to the consumer

How do TNCs Maximise Profit?

• Workers have lower wages in some countries
• Government legislation on working conditions/environment less strict in some countries
• Governments offer lower tax rates to invest
• Selling globally expands consumer market
• Wider global market raises status of brand with consumers