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Lesson Objectives |
To understand how TNCs contribute to the globalisation process and the impacts that they have on a global scale. |
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Transnational Corporations (TNCs) |
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Copy and complete the sentences below into your book or a word document. (You can click here for the worksheet.) |
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A Transnational Corporation is a _____________ company which has __________ factories or branch plants in a number of countries. Many TNCs can control the whole production process from ______________________ to the __________ ______________. |
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As a result of this, TNCs are extremely __________________ and as much as ________ of world trade is the exchange of goods between TNCs. It is not unusual for the profits of one TNC to be higher that the wealth of a poorer nation eg Exxon Mobil makes $210 billion a year compared to the whole country of Jamaica that makes $8 billion! |
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WHERE DOES THE MONEY GO WHEN YOU BUY A PAIR OF TRAINERS? |
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Nike is a large TNC, it’s headquarters being based in the USA. Look at the trainer below. It costs us £100 to buy this pair of trainers. How much do you think goes to each part of the production process? |
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a) Match the quantities below to the process… |
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b) Display this data as a bar graph. Use paper, or excel and the chart wizard to present the data. Do not forget to label the axes and give the graph a title. |
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c) Can you say why there are such huge differences in where the money goes? |
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Why does Nike want to set up factories abroad? |
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Using your graph, try to answer the following questions: |
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- Which group of people get paid the least?
- Why do you think that they get paid the least?
- Why do you think that TNCs set up in LEDCs (less economically developed countries)? Use the information below to create your own spider diagram of these ideas.
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There are lots of reasons why TNCs set up abroad. The main reason is so that they can make a lot of profit. They do this by taking advantage of cheap labour, making the workers work extra hours, taking advantage of the fact that LEDCs have few health and safety regulations and that they have few workers unions, meaning that workers never strike. It is also cheaper to set up a factory in a LEDC as land is cheaper and so are raw materials. Quite often LEDC governments offer TNCs a lot of money to set up there as they think it will benefit their economy. |
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What are the Advantages and Disadvantages of TNCs to the LEDC? |
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Put the following statements under 2 headings – advantages and disadvantages… |
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- Builds up trade links with other countries
- Jobs are very low paid
- Workers work in poor conditions
- Money enters the host country
- Location of a company such as Nike encourages other TNCs to locate there
- Local businesses suffer
- Workers earn more money than they could get in any other local job
- Increases disposable income in the area
- Health and safety regulations are not adhered to
- Improves living standards
- No workers rights
- New services are developed in the area
- Most of the money made goes back to the MEDC i.e. USA
- Local transport links are improved
- The host country is controlled by the company’s headquarters
- Trains local people in a specific job role
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WHAT DO YOU THINK? – ARE TNCs BENEFICIAL TO A LEDC OR NOT? |
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Your teacher may now ask you to prepare for a debate answering the question above. |
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