Coca Cola - Introduction to MNC

Know and understand how globalisation both helps and hinders development with reference to one case study from an LEDC or NIC.

Where can I get a Coke? The company sells over 400 brands in over 312 countries or territories. 90 billion servings of Coke’s products are consumed each day

A multinational company is one that operates in more than one country across the world. http://www.flickr.com/photos/lynns/110140674/

Apart from operating in more than one country, multinationals also have a number of other characteristics… Well-known brands Huge Profits Large employers http://www.flickr.com/photo_zoom.gne?id=286819826&size=o Headquarters mostly in MEDC countries. Atlanta, Georgia, USA $24 billion dollars 71,000 people worldwide

An increase in the flow of goods, services, people, capital across national borders in order to create a more integrated and interdependent world economy. http://en.wikipedia.org/wiki/Globalization The term globalisation is contested, a general definition is… Basically the World is shrinking.

Improved transport means that people and goods can be moved around the world more quickly. Distance between places hasn’t changed, but the time needed to cover those distances has. http://www.flickr.com/photos/danoots/165294639/

Improvement in technology, such as the internet, has meant that capital (money) can be transferred instantly between locations. People can also use telephones and the internet to communicate more easily in ‘ real time ’. http://www.flickr.com/photos/ldandersen/301812211/

Improvements in technology have also lead to the development of a mass media , television, radio and internet, far off places now seem much closer… we can even see them in real time. http://www.flickr.com/photos/skooal/322346446/

These factors have lead to increased interdependence between places… they also seem much closer than they did. http://www.flickr.com/photos/anjan58/1281306048/

http://www.flickr.com/photos/blipfish/124908486 /

Bottled in 200 countries across the world. http://www.flickr.com/photos/jamesonroper/400400410/

http://www.flickr.com/photos/33924575@N00/677513608/ Manufacturing your product in the country you sell it has a number of advantages.

Labour costs may be lower in some countries, especially LEDC countries. Low labour costs = higher profits. Labour Costs http://www.flickr.com/photos/thomasvr/2178131895/

Manufacturing your product in the country it is sold reduces transport costs. Less transport = higher profits. Transport Costs http://www.flickr.com/photos/jungkumseok/2175023880/

Legalisation on working conditions, workers’ rights, health and safety, and the environment may be less strict in some countries. Relaxed legalisation = lower overheads= more profit. Legalisation http://www.flickr.com/photos/22385378@N02/2171255668/

Some countries may try to encourage multinationals to invest in their country by offering lower tax rates and financial incentives. More favourable taxation = lower overheads= more profits. Business conditions http://www.flickr.com/photos/dukeofism/2137719782/

Coca-Cola employs people. Coca-Cola locates in an area http://www.flickr.com/photos/ikayama/784139355/ Generates income for local suppliers Employees have greater income. Generates income for local businesses Employees pay taxes Increased tax revenues can be spent on the local community. Process of the positive multiplier effect. And so on… And so on…

It widens your market. More consumers= more profit. Market http://www.flickr.com/photos/perverted_introvert/2197021334 /

The status of your brand is raised. More status = more consumers = more profit Brand Status http://www.flickr.com/photos/gunnarfreyr/2196432220/

Producing your product in a country and adapting to the local market makes it seem more ‘local’. More local = more consumers = more profit. Local feel http://www.flickr.com/photos/liemtran/2184656873/

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Coca Cola - Introduction to MNC

by TonyCassidy

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