1 / 11

Rise of transnational corporations

Rise of transnational corporations. Part III: Reasons for global expansion. Reasons for globalization trend. Consider the following four aspects: Cost Market Technology Government Are they important to explain the globalization trend in manufacturing industries?. Cost.

cdawes
Download Presentation

Rise of transnational corporations

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. Rise of transnational corporations Part III: Reasons for global expansion

  2. Reasons for globalization trend • Consider the following four aspects: • Cost • Market • Technology • Government • Are they important to explain the globalization trend in manufacturing industries?

  3. Cost • Difficulties in developed countries: rising production costs due to • Higher labour cost • Higher land price • Result: look for low-cost site (least cost locations)

  4. Higher labour cost • Higher education level • Labour tend to be highly-skilled and professional • Lack of labour for low skill jobs • Labour shortage due to lower birth rate

  5. Higher land price • Keen competition of land in urban areas • With other land uses like commercial and residential areas • Shortage of industrial land for further expansion

  6. Market • Market expansion is necessary when the home market is saturated • The need of market diversification to lower risks • Some industries require close contact with customers in different countries • Setting up regional offices/headquarters help TNCs learn more about customers’ needs • Can respond to local market conditions quickly, e.g. adjustments made to the products to suit the needs of local markets • Bringing more business opportunities

  7. Technology • Advancement in technology can facilitate the growth of TNCs • In terms of • Transport technology • Computer technology

  8. Transport technology • More secure and rapid transshipments of goods • More speedy and frequent in freight and passenger transport, e.g. rail, road, sea and air • Rapid growth of transport and logistics • All reduce the problems of movement of personnel / enhance labour mobility

  9. Computer technology • Enhances easy handling and interpretation of data to global manufacturing operations • Texts or documents available in different languages • Setting up of corporation websites can help expanding global markets by providing sufficient information about the company • Development of e-commerce enhances online transaction • Advanced telecommunication networks facilitate easy management over regional offices • Can share ideas more efficiently in a global scale • Can obtain spontaneous information about local markets

  10. Government • Supported by national government • Incentives to TNCs to attract FDI • Offer preferential treatment like low taxes • Cut costs by direct sales abroad; lower tax is paid • Strict pollution laws increase production cost in developed countries

More Related