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Economic World Case Study. Fiat, a TNC in Brazil. What do you need to revise?. What are TNCS? Introduce your TNC; Fiat. Which other TNCs have located in Brazil? Provide some information about Fiat’s Betim plant. Why did Fiat chose to locate in Brazil?

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economic world case study

Economic World Case Study

Fiat, a TNC in Brazil

what do you need to revise
What do you need to revise?
  • What are TNCS?
  • Introduce your TNC; Fiat.
  • Which other TNCs have located in Brazil?
  • Provide some information about Fiat’s Betim plant.
  • Why did Fiat chose to locate in Brazil?
  • Why has Fiat expanded its production in Brazil?
what is a tnc
What is a TNC?
  • A Transnational company.
  • A company that operates globally and tends to have headquarters in their country of origin (often an MEDC) and branches or production lines all over the world.
fiat brazil
Fiat, Brazil
  • One of the world’s largest industrial groups.
  • Operates in 64 countries.
  • Revenue over 48 billion euros, 39% of which is made outside of Italy.
which other tncs are in brazil
Which other TNCs are in Brazil?
  • Many TNCs have located in Brazil. A few of which are:
    • VW of Germany
    • Ford of USA.
betim plant
Betim Plant.
  • Fiat’s first plant was in Betim in 1976 – employing over 10,000 workers and producing 130,000 cars pa.
  • Betim is part of the industrial belt of Belo Horizonte (capital of Minas Gerais- a wealthy state in SE Brazil).
  • 1990s Fiat invested a further $1.5 billion to update the plant & develop the Palio & Tipo cars.
  • Now employs 12,000 workers and produces 650,000 cars pa.
tipo palio cars
Tipo & Palio cars


why did fiat choose to locate in brazil
Why did Fiat choose to locate in Brazil?
  • The Brazilian Government wanted a car industry (long-term employment) and offered large incentives to TNCs.
  • Fiat located in Minas Gerais as the state gave 50% of the start up costs.
  • Fiat would have a guaranteed market and could cope with demand ( 1970- 255,000, 2000: 2,800,000 cars produced and sold).
  • Cheap labour: $7/hr (in UK $18/hr).
  • Strikes unlikely (military government & good work ethic with 4 people waiting for a job for every person hired) so no production time lost.
why has fiat expanded in brazil
Why has Fiat expanded in Brazil?
  • State of Minas Gerais gave Fiat $135m towards opening of a new factory at Sete Lagaos (over half the cost). This was a joint venture to make Ducato vans to help increase share of the light van market from 9% to 15%.
  • Also Fiat are expecting a huge increase in demand. If they are in the country they save costs of import duties and transportation to other South American countries.
ducato vans
Ducato Vans

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possible exam questions
Possible Exam Questions:
  • What is meant by the term ‘TNC’?
  • With reference to your chosen case study, explain the factors associated with a TNCs decision of where to locate. [6]
  • With reference to your chosen case study, explain why a TNC may often chose to locate in an LEDC for its production while its headquarters remain in its MEDC of origin [6].