TNCs

Seite 1

TNCs: characteristics and spatial organisation

TNC - a transnational corporation is a company which operates in two or more countries. Typically the headquarters and research & deveopment are in the country of origin and production are outsourced to host countries overseas.

TNCs take advantage of government policies such as lower taxes, subsidies and grants as well as less strict legislation on employment and pollution. By locating in certain countries TNCs can get around trade barriers because they operate within the trade bloc. All of the above allows TNCs to reduce costs, finance new investment and compete in world markets.

They currently control over 75% of world trade and are dominant in today's society.

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Toyota

2010: 5th largest TNC worldwide

Today it earns a capital of £2.6 billion

1918 - Toyota was a textile company

following this Toyota made it's first car sold only in Japan

1959 - began to sell in the USA

1980s - began to build plants in the USA

1992 - expanded to Europe

today - Toyota have 15 plants in Japan and 51 in 26 other nations

Most of its manufacture is located in Asia and the middle east where it is cheaper. The workforce there is large and the plants benefit both Toyota and the host countries.

Reasons for growth include:

setting up in LEDC countries so that it could globalise and expand it's markets without having to pay tariffs. For example, Toyota set up plants in the UK and can therefore avoid tariffs throughout the whole of the EU

Good infrastructure meant that they could transport there goods easily

employed highly skilled, large workforces which meant their production efficiency was high.

Desirable car company because they have good ethos and are environmentally friendly meaning the amount of customers they have is constantly increasing

Seite 3

Impacts of Toyota on host

Positive Social

works with the Nation Centre for Family Learning in 56 cities - encourages education

has introduced new skills and technologies to less developed host countries

higher employment - higher standard of living

Positive Economic

employs 324,747 people worldwide

some money earned is reinvested into the host country - social and infrastructure

exports from Toyota boost the car industry - strong purchasing power

Positive Environmental

donates $1 million to the everglades national park

protects the APA Costa dos Corals (coral reef) in Brazil

Negative Social

when Toyota first started manufacturing in Brazil in 1958 a car was an inappropriate good for the population

2008 - claims of forcing employees working 97 hour weeks for just £940

Negative Economic

high percentage of the profit goes back to the host (Japan)

Manufacture in Australia ends this year 2016 - loss of jobs and economy

Negative Environmental

manufacture in Asia and Africa where legislation/regulation is less strict leads to exploitation

factories cause pollution

burnaston plant is built on a greenfield