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?

Total annual income for country Rank Company HQ Industry Revenue $bn 1 Exxon-Mobil USA Oil 377 2 Wal-Mart Retailing 351 3 BP UK 318 4 Shell UK/ Netherlands 274 5 General Motors Cars and vehicles 207 Annual turnover for top five transnational companies. Compare the income of the top five transnational companies with the countries listed in the table below. What do you notice? Country Total annual income for country GDP ( $bn) Sweden 444 Greece 360 South Africa 277 Malaysia 180 Annual income ( GDP) of selected countries.

To sell inside trade barriers To be close to markets To find cheap labour REASONS FOR GOING GLOBAL To sell inside trade barriers To spread industrial risks To take advantage of incentives

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.

Advantages and disadvantages of TNC’s 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 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.

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