1. CHAP 26: GLOBAL BUSINESS 1.What are TNC’s?
TNC’S are firms that produce and market goods in more than one country.
Examples: Shell, McDonalds, Mitsubishi
Business decisions are made on a country by country basis. They have a global perspective which means they see the world as one giant marketplace. They do not have a particular allegiance to any one country.

2. 2. How do TNC’S & global companies operate?
OPERATIONS
They have factories in different countries in order to maximise profits and minimise costs. This means locating in a country where wages and taxes are lowest.
They often use “PRODUCTION SHARING”. This means that part of a product is made in one country, shipped to another for further assembly and then finished in another country.

3. 2.Marketing
Usually the production and advertising of goods are standardised and homogenous. It can be adapted to meet the needs of specific markets and countries.
3. Financing
Finance is raised by obtaining long term loans. They can also engage in transfer pricing, this the buying and selling of goods between their own subsidiaries. This can help Global Companies to manipulate the tax system by having businesses in different location and paying the tax in the country with the keenest rates.

4. 4. Human Resource Management
Employees especially management are often moved around between different subsidiaries in different countries. TQM techniques are used to match the desired quality standards.

5. STEPS TO BECOME A GLOBAL BUSINESS
National Business:
International Business:
TNC’s:
Global
Firms:
Home is the only market
Home country is the main market but some goods exported
produce & sell in numerous countries, decisions made on a country by country basis
the world is the market, decisions on finance, marketing, HRM are made on a global basis.

6. 3. Why have TNC’s/Global firms developed?
Improvements in transport & IT communications, Internet/e-commerce
Domestic market saturated
Opening up of global markets
Emergence of trading blocks
The deregulation of trade restrictions
The benefits of economies of scale
Bankers/investors are more willing to invest on the global stage

7. 4. What is Global Marketing
Global Marketing means marketing a product globally with broadly the same marketing mix, as though they were a single marketplace. EG – COCA COLA
An adapted global marketing mix means adjusting the mix to take account of cultural, geographic, economic differences
EG In France the McDonalds sells wine and in India the McDonalds sells fish, chicken instead of hamburgers.

8. 5. What are the elements of the global marketing mix?
Global Product: It should have a distinct advantage/ USP over existing competitors.
The product must comply with national regulations, easy to transport, functional in all climates.
Global Price: the price set on particular globalised products should
Cover the costs of manufacture, labour etc.
Aim to make a profit
Take environmental costs into account
Take different taxes/tariffs into account
Take marketing objectives into account

9. Global Promotion
As well as using advertising, sales promotion etc the selling of goods on a global scale can include the use of
trade fairs,
trade missions and
the internet

10. Global Place/Distribution
A firm wishing to distribute its product on a global scale can chose from the following channels of distribution.
Direct selling to customers
Use of agents to sell your product in a target market
Set up a foreign subsidiary
The setting up of joint ventures or strategic alliance

11. 6. Why do TNC’s locate in Ireland?
Access to EU markets
Avail of low tax incentives
Highly skilled workforce
Generous government grant aid available
Langauge of english appeals to attract foreign companies especially American firms
The link with universities and the ability to recruit high tech sector graduates

12. 7. Positive/Negative effects of TNC’s & Globalistion for Ireland
Positives
Irish business can supply larger TNC’s located here
The government can raise tax revenue
Increases in employment levels

13. Negatives
They become powerful and can dictate to national governments
They become “footloose” as they become powerful and they give very little consideration for the effects of a factory closure
EG – DELL Limerick in 2009 moving to Lodz – Poland
They create competition amongst existing Irish Businesses.

14. 8. Should the activities of TNC’s be controlled?
There is an argument for tighter control on their activities. This type regulation is seen as difficult to implement and has arguments for and against.