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TRANSNATIONAL CORPORATION (TNCs) . Nguyen Thuy An Nguyen Thi Lan Anh Tran Quoc Vy Ngo Nguyen Minh Hang Van Thi Ngoc Dung Nguyen Tuong Dat. Outline. Transnational Corporation (TNCs).

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transnational corporation tncs

TRANSNATIONAL CORPORATION (TNCs)

Nguyen Thuy An

Nguyen ThiLanAnh

Tran QuocVy

Ngo Nguyen Minh Hang

Van Thi Ngoc Dung

Nguyen TuongDat

transnational corporation tncs1
Transnational Corporation (TNCs)

Private firms that have established branch operation in nations foreign to their headquarters’ country

E.g. Wal-Mart, Toyota Motor, Ford Motor …

slide4

Serve domestic market only

Export to overseas market(s) through independent channels (e.g. sales agents)

License foreign manufacturer to produce for overseas market(s)

Establish sales outlet in overseas market(s)

Establish production facility overseas

(a) By acquiring local firm

(a) By setting up new facility

(a) By acquiring local firm

(a) By setting up new facility

TNC- development as a sequential process

foreign direct investment fdi
Foreign direct investment (FDI)

The purchase or construction of factories and other fixed asset by TNCs

distribution of fdi
Distribution of FDI

Source: UNCTAD survey.

BRICs dominate the top 5 most attractive economies for FDI

locational criterion
Locational Criterion

For market growth, developing and transition economies

E.g. China, India, Brazil, the Russian Federation, Indonesia, Viet Nam, Poland and Thailand.

For market size, the largest economies are favored, either developed ones (E.g. the United States, Germany and Canada) or emerging ones (E.g. China, the Russian Federation and Brazil).

….

slide10

Source: UNCTAD survey.

Size and growth of market are the major location determinants

fact figure
FACT & FIGURE

62 000 TNCs

900 000 foreign affiliates

56 million workers

19 trillion in sales

1/10 of world GDP

1/3 of world export

 TNCs become ever-more important in the globalizing world space economy

1 the direct impact of tncs is limited to relatively few countries and regions
1. The direct impact of TNCs is limited to relatively few countries and regions

FDI (foreign direct investment): the investment by TNC to other countries

For developing country: <30% (early of 21st century) 42% (2004)

majority: South, Southeast and East Asia, Latin American and Caribbean

For least developed country: 1%(1994) 5%(2004)

 The vast majority of FDI still flows not to the poor or developing worlds but to the rich

1 the direct impact of tncs is limited to relatively few countries and regions1
1. The direct impact of TNCs is limited to relatively few countries and regions

WHY?

TNCs actively engaged in Merge and Acquisition in already developed foreign market areas

HOWEVER

in 2004, FDI for developed country declined (<50% of the peak in 2001)

FDI in Asia rose by over 6%

2 the worldwide impact of their consolidation is significant
2. The worldwide impact of their consolidation is significant

Focus in few industries: computers, electronics, petroleum and mining, motor vehicle, chemical and pharmaceuticals, etc.

In raw materials:

few TNC account for 85% of world trade

World pharmaceutical industry:

dominated by just 6 firms

Automobiles producer:

15 firms( early 21st ) 5 or 10 (2015)

comparative advantage of tnc
Comparative advantage of TNC

Most TNCs operate in a few industries (computers, electronics….)

Some dominate the marketing and distribution of basic and specialized commodities

For example: in raw materials, a few TCNs account for 85% or more of world trade in wheat, maize, coffee…

In manufacturing, pharmaceutical industry is dominated by just six firms

The world’s 15 major automobile producers at the start of the 21st century, it has been predicted, will fall to five or 10 by 2015

comparative advantage of tnc1
Comparative advantage of TNC

TNCs actively exploit the principle of comparative advantage

They produce in that country or region where costs of materials, labor, or other production inputs are minimized

Maintaining operational control and declaring taxes in localities where the economic climate is most favorable

Research and development, accounting, and other corporate activities are placed wherever economical and convenient.

honda
Honda
  • Established in 24 September 1948.
  • Soichiro Honda

(1906-1991)

  • Takeo Fujikawa

(1910-1988)

slide22
CEO

Takanobu Ito

products
Automobiles

Motorcycles

Scooters

ATVs

Electrical Generators

Water pumps

Lawn and Garden Equipments

Tillers

Outboard motors

Robotics

Jets

Jet Engines

Thin-film solar cells

Products
corporate profile and divisions
Corporate Profile and Divisions
  • Honda is headquartered in Minato, Tokyo, Japan.
  • Their shares trade on the Tokyo Stock Exchange and the New York Stock Exchange, as well as exchanges in Osaka, Nagoya, Sapporo, Kyoto, Fukuoka, London, Paris and Switzerland.
  • Honda has also created joint ventures around the world:
      • Honda Siel Cars and Hero Honda Motorcycles in India
      • Guangzhou Honda and Dongfeng Honda in China
      • Honda Atlas in Pakistan
assembly plants
Assembly Plants
  • 50 Factory in 19 countries around the world.
  • 200.000 employees
  • Total Assets of 124.98 billion USD (FY 2009).
honda regional competitive advantages
HONDA - regional competitive advantages.

IN US

Main product: automobiles

regional competitive advantages
Regional competitive advantages
  • Market is large because GDP/person is high.
  • Traffic infrastructure is qualify.
  • Demand of cars is high.
regional competitive advantages1
Regional competitive advantages:

Developed industry with high technology level.

Skill labors

honda regional competitive advantages1
HONDA - regional competitive advantages.

IN VIETNAM

Main product: Motorcycle

regional competitive advantages2
Regional competitive advantages

Large population and GDP/person is quite low Demand of motorcycle is high.

The traffic infrastructure is low quality.

VN economy is just centralized develop in some major region, so the short distance does not require cars.

regional competitive advantages3
Regional competitive advantages

Developing country low technology and science infrastructure ; unskilled labors

 more relevant to produce motorcycle than automobile.