Location• HQ’s are in Toyota city in Japan- here key decisions are made and its financial control.• Production is located in Japan, Asia, Europe, North America, South America, Africa and Oceania- the company often set up transplant in an area where the raw materials required for the manufacture of their products can be found- this saves transportation costs and the company can avoid import/export tariffs.• Although based in Japan, Toyota produces most of its cars in transplants in Georgetown, Kentucky and Burnaston, Derbyshire.
Organisational Structure• Headquarters: Toyota city, Japan- there is easy access to Tokyo with its financial market and excellent communication and transport links. There are also regional headquarters.• Research and Development: Strongest in Japan but also 7 R&D units/annies outside Japan in regional markets.• Production: All over the world (in every continent)
Driving force behindToyotas globalisation • Lowering unit costs by accessing global markets- this provides savings through economies of scale. • Avoiding trade barriers by locating production in regional markets. • Meeting the specific needs of customers by locating in regional markets.
POSSIE• Provides inward investment and creates jobs for local people.• Increase incomes and raised living standards among employees• Boost exports and help trade balance• Develop and improve skill levels and expertise among the workforce.• Increase spending and create positive multiplier effect among local economies.
NEGGIES• Exploitation of workforce especially in LEDCS with poor working conditions, low wages and long hours.• Environmental pollution (in LEDCS)• Lack of security with closure of operations as lower cost locations attract investment elsewhere.• In many LEDCS jobs are mainly low skilled in labour intensive industries.• Competition could leave to the closure of domestic firms.• Lack of control with key decisions taken overseas at company HQs.
LOCATION• HQ in Delft, Netherlands• 338 stores in 40 countries including Sweden (17), US (38), UK (18)• Does not show much of a presence in developing countries• Location of stores is vitally important as should be near major roads/ freeways and/or public transport
ORGANISATIONAL STRUCTURE• Financial control and strategic decision making is centred in Leiden, close to Amsterdam.• Almhult, the birth place of Ikea, has a key role as the companies design headquarters.• Nearly 2/3 of suppliers are located in europe.• Suppliers transport finished products direct to Ikea’s 31 distribution centres.• In order to minimise environmental impact, the company encourages the use of rail transport.• To remain competitive, Ikea has to be very price conscious.• Ikea is privately held by a foundation, which in turn owns a group that controls the companies that run Ikea’s individual operations.• The need to be close to materials is evident in the location of plants in Finland and Russia.
IMPACTS• Ikea’s activities suggest that its economic and environmental impact is generally positive.• The company sets strict rules for its suppliers, proscribing child labour.• It also tries to ensure that they pay fair wages, encourages the use of eco friendly railways, rather than road.• Globally, Ikea directly employs 118000 coworkers, with thousands of others in supplying companies.• It purchases its raw materials from more than 50 countries, principally China, Sweden, Poland, Germany and Italy.• In 2000, Ikea launched the Ikea way on purchasing home furnishing products, a three-page ‘code of conduct’ for its 2,000 suppliers, focusing on working conditions and environmental impacts.
Location of Nike’s HQ and Branch plants Nike’s global headquarters is located in Beaverton, Oregon, USA Nike employs 650,000 contract workers in 700 factories worldwide. The list includes 124 plants in China, 73 in Thailand, 35 in South Korea and 34 in Vietnam. More than 75% of the workforce is based in Asia.
Organisational StructureThe company is an example of a ‘vertical’organisational structure acrossinternational boundaries, characterised by ahigh level of subcontracting activity.This means that there is a strict hierarchythat creates layers of officials within anorganisation.Nike does not make any shoes or clothesitself, it contracts out production to SouthKorean and Taiwanese companies.
Positive Impacts on LEDCs Outsourcing creates substantial employment in Vietnam. Nike pays higher wages than local companies. Improves the skills base of the local population. The success of the global brand may attract other TNCs setting off cumulative causation. Exports are a positive contribution to the balance of payments. Sets new standards for indigenous companies. Contribution to local tax helps pay for new and improved infrastructure.
Negative Impacts on LEDCs Concerns over the exploitation of cheap labour and poor working conditions. Suspicions have been raised over the use of child labour. Company image and advertising may help to undermine national culture. Concerns about the political influence of large TNCs. It is possible for investments to be transferred to lower cost locations.
Positive Impacts on MEDCs Positive employment impact and stimulus to the development to high level skills in design marketing and development in Beaverton Oregon. Direct and indirect contribution to local and national tax base.
Negative Impacts on MEDCs Nike does not manufacture in the US which leads to indirect loss of jobs and negative impacts on balance of payments as footwear is imported. Trade unions complain over an uneven playing field because of the big contrast in working conditions between LEDCs and MEDCs.