B - Transnational Corporations X (Why have them? (to broaden their sphere…
B - Transnational Corporations X
What are they?
Transnational company is a company that chooses to branch out from its original place of manufacturing, production, and sales to neighboring states or even all across the globe.
There they usually have production and manufacturing plants while keeping the headquarters of the company in its home country, i.e. Atlanta for Coca Cola.
Why have them?
to broaden their sphere of influence
bring them more clientele
find more competition
more profit on the long run
spend less on production
workers are paid very little and are unlikely to form workers unions
reduces to price of transportation (i.e. Coca Cola manufacturing plants in India an LEDC, where they have a large part of their clientele)
better positioning on important foreign markets
These institutions have great influence on governments and throughout the world economy of which they control about 2/3 of the international trade.
Has a ww reach + impact with 25M customers per day, and a revenue in 2013 higher than the EU's gdp with $16.5B.
70% of Coca Cola's sales are generated outside of North American in TNCs with different brands the company owns, like Minute Maid, Fanta, and Sprite.
Deforestation (for palm oil) causing wildlife to lose their habitat and become more scarce or even extinct.
Said they they had a 'zero-deforestation' policy implemented since 2010, but no concrete action can be seen on their part to strive for this.
Try to resolve the issue by selling a good image to environmentalists by green-washing their incentives.
Labor problems in host countries
TNCs sometime choose the host country by the regulations they have on labor.
If a country has very few workers' unions or very few laws for labor rights, they could be seen as attractive to TNCs.
Working conditions can be very harsh. In India a Coca Cola bottling facility was shut down because the quality and quantity of water available to the locals decline greatly.
What's in it for the host countries?
Some say yes because with TNCs come more job opportunities for the locals (although they are generally not well paid and have very little rights).
Coca Cola offers training and education to its workers.
Can help nations by investing in infrastructure there, thus aiding their development.
If the TNCs are unhappy with how they are doing in the countries (bad economy etc.) they can decide to pull out at any time and many could lose their jobs.
Nestlé taking part of an illegal pet trade circle has made the company lose popularity and has started a feud with environmental organizations such as Greenpeace.
Usually profit return to the shareholders and very little is left for the workers, facilities etc. in the host countries.