Globalisation Why do TNCs operate in different places

Globalisation

Why do TNCs operate in different places? Outsourcing is cheaper Offered incentives Grows their market Distribution is easier What TNC have you studied? Write three key facts

Nike as a secondary TNC Footwear is made in 150 factories in 14 countries – China, Vietnam and Indonesia producing the most. 430 factories supply Nike apparel in 41 countries including: China, Vietnam, Thailand, Indonesia, Pakistan, Malaysia. All manufacturing is outsourced – so other companies make their goods under license why? : Cheaper. Incentives easier to move onaccess new markets. Leaner-

Nike as a Tertiary TNC • Nike Distribution centres are located in 21 countries the biggest in Memphis is tha biggest US one. They supply stores. • Nike has 930 retail stores worlwide. • Nike has created retail partnerships with JD sports, Footlocker and Intersports in the UK. These provide … • Online at www. nike. com provides jobs at the IT centres and the distribution centres that fill the orders. • Nike factory stores……… • Niketown stores… [44% of it sales are in the USA] • EMERGING markets in China and Brazil as middle classes are growing and can afford the products • Sponsorship & Marketing also provide employment in the areas but may be contract based ie: to deliver the world cup in Brazil 2014 then the contract ends

What groups of people benefit from TNCs • Woman who work in factories –paid employment training, better life, • Government – taxes paid, infrastructure, DFI, • Factory owners – good contracts, overseas customers, growing markets

The down side? • Nike profit goes to the USA • Contract decisions make outside the country • Management may come form outside the country • Political pressure • Poor pay and conditions • Trade agreements may change • Tax incentives change

How can the IMF help? What did they do for Greece? How can they help a more globalised economy?