1 / 6

Transnational corporations: How do they keep it all together?

Transnational corporations: How do they keep it all together?. Being everywhere, effortlessly. This is a myth, a big fat lie. One thing TNCs do well: bargain with host countries One thing TNC’s may not do well: Have complete control of global production.

odina
Download Presentation

Transnational corporations: How do they keep it all together?

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Transnational corporations:How do they keep it all together? • Being everywhere, effortlessly. • This is a myth, a big fat lie. • One thing TNCs do well: bargain with host countries • One thing TNC’s may not do well: Have complete control of global production. • Management and coordination of internalized vs externalized transactions.

  2. How do they keep it all together?Organizing Production • Internalized production • Globally concentrated production. • Host-market production. • Product specialization for global or regional market. • Vertically integrated production. • Inter-firm relationships • Subcontracting (outsourcing) • Commercial subcontracting: OEM (original equipment manufacturing) vs ODM (original design manufacturing • Industrial subcontracting: OEM (manufacturing) only. • Strategic Partnerships • Franchising

  3. Spatial organization: BMW • Corporate headquarters: Munich, Germany • R&D • Internationally integrated R & D facilities: Core technologies: Southern Germany and Austria • Locally integrated R&D facilities: Southern California, Singapore and Tokyo, Local design issues, emissions testing • Assembly: Germany for EU, UK for UK • Components: BMW made in Germany. Third party often follow assembly plants. • Logistics: Center in Germany coordinates parts distribution. Run by a third-party logistics firm.

  4. Example: Apple MacBook. • Apple places an order with Taiwan’s Quanta (production in Shanghai). • Quanta purchases from Intel (chipsets), Seagate (hard disks), Samsung (memory), Delta (power supply) Chungwa Picture Tubes (screens) • Laptop made and express shipped to customer.

  5. Key Point • Managing a transnational is difficult, there are many possibilities, and different strategies may not work in all places and at all times.

  6. NIDL • New International Division of Labor: • Transfer of low-skill, labor intensive processes to LDCs, while retaining high-skill, capital intensive processes in MDCs. • Critiques of NIDL • Traditional IDL (resource extraction) is still very significant and has actually grown (esp. agribusiness) • FDI remains dominated by investments between rich countries. • Rapid growth of TNCs from the LDCs • Much of the world’s FDI is in service sector and primarily serves local markets • Significance of cheap labor is overstated compared to regulation, government policy, business climate, etc.

More Related