Transnational businesses and globalisation | tutor2u Economics
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Transnational businesses and globalisation

  • Levels: AS, A Level, IB
  • Exam boards: AQA, Edexcel, OCR, IB, Eduqas, WJEC

Transnational businesses (TNCs) base their manufacturing, assembly, research and retail operations in a number of countries. 

The importance of transnational businesses

Many TNCs have become synonymous with globalisation such as Nike, Apple, Wal-Mart, Uber, Amazon, Google and Samsung. 

For example, Google has offices in more than 60 countries

The biggest 500 TNCs together account for nearly 70% of world trade.

TNCs are a key driver of globalisation because they have been re-locating manufacturing to countries with relatively lower unit labour costs in order to increase profits and returns for shareholders.

For example, Volkswagen, Toyota, Nissan and General Motors all have bases in Mexico which has helped this country to build a comparative advantage in manufacturing and then exporting vehicles within the NAFTA free trade area (Mexico, USA and Canada)

Transnational businesses from emerging countries

There are many TNCs from emerging/developing countries. 

  • China Mobile is in the top ten consumer brands in the world
  • Alibaba has expanded to be the biggest global online retailer. It is known as the Amazon of China!
  • The Tata Group conglomerate from India has made significant investments in Western economies e.g. Jaguar Land Rover
  • Infosys from India is one of the world’s biggest information system businesses employing over 160,000 people worldwide
  • Chinese car-maker Geely bought Swedish firm Volvo in 2010 for $1.8bn and took a 49.5% stake in Malaysian car-maker Proton (including the Lotus brand) in 2017
  • China’s Huawei Technologies is a competitor to Samsung & Apple

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