MULTI-NATIONALS <ul><li>A MNC is a business which owns or controls production or service facilities outside the country in...
Some MNCs <ul><li>Examples </li></ul><ul><li>Ford </li></ul><ul><li>British American Tobacco </li></ul><ul><li>Volkswagen ...
Some facts about MNCs <ul><li>Multinational companies have branches called  </li></ul><ul><li>‘ subsidiaries’  in more tha...
MNCs in Scotland <ul><li>Electronics industry – in central belt of Scotland eg Compaq, IBM; </li></ul><ul><li>Oil Industry...
Reasons for Establishing MNCs <ul><li>To  increase market share; </li></ul><ul><li>To secure  cheaper premises and labour ...
REASONS FOR BEING A MNC <ul><li>To avoid protectionist policies </li></ul><ul><li>By producing within a country, a company...
Advantages of MNCs to the Host Country <ul><li>They bring new jobs to an area; </li></ul><ul><li>Often at the forefront of...
Disadvantages of MNCs <ul><li>They are very powerful and can influence the government of a country; </li></ul><ul><li>Loca...
MNCs and Social responsibility <ul><li>Often criticised for their marketing techniques, eg Nestle and baby milk; Marlboro ...
Government control <ul><li>Some people feel that MNCs have too much influence over governments. </li></ul><ul><li>In some ...
WORKSHEET <ul><li>Suggest reasons for establishing MNCs .   (4) </li></ul><ul><li>Identify the features of a multi-nationa...
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3 Multi Nationals

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3 Multi Nationals

  1. 1. MULTI-NATIONALS <ul><li>A MNC is a business which owns or controls production or service facilities outside the country in which it is based. </li></ul><ul><li>This means that they do not just </li></ul><ul><li>export their products, but make </li></ul><ul><li>them abroad. </li></ul><ul><li>Usually have interests in at least </li></ul><ul><li>4 countries , but most operate in </li></ul><ul><li>more than this </li></ul>
  2. 2. Some MNCs <ul><li>Examples </li></ul><ul><li>Ford </li></ul><ul><li>British American Tobacco </li></ul><ul><li>Volkswagen </li></ul><ul><li>Matsui </li></ul><ul><li>Unilever </li></ul><ul><li>The biggest : </li></ul><ul><li>Exxon (Esso) </li></ul><ul><li>General Motors </li></ul><ul><li>Royal Dutch Shell </li></ul><ul><li>These companies have a turnover in excess of the GNPs of most </li></ul><ul><li>countries. </li></ul>
  3. 3. Some facts about MNCs <ul><li>Multinational companies have branches called </li></ul><ul><li>‘ subsidiaries’ in more than one country; </li></ul><ul><li>Many have sales ‘outlets’ in various countries; </li></ul><ul><li>A MNC must have production facilities in more than one country. </li></ul>
  4. 4. MNCs in Scotland <ul><li>Electronics industry – in central belt of Scotland eg Compaq, IBM; </li></ul><ul><li>Oil Industry – in the northeast, multinationals like Shell and BP Amoco </li></ul>
  5. 5. Reasons for Establishing MNCs <ul><li>To increase market share; </li></ul><ul><li>To secure cheaper premises and labour ; </li></ul><ul><li>Employment and Health & Satfey Legislation in other countries may be more relaxed </li></ul><ul><li>To avoid or minimise the amount of tax to be paid ; </li></ul><ul><li>To take advantage of government grants available; </li></ul><ul><li>To save on costs of transporting goods to the market place; </li></ul><ul><li>To avoid trade barriers like the EU Common External Tariff; </li></ul><ul><li>To develop an international brand </li></ul>
  6. 6. REASONS FOR BEING A MNC <ul><li>To avoid protectionist policies </li></ul><ul><li>By producing within a country, a company can avoid tariffs and import controls. </li></ul><ul><li>Japanese car companies who produce in the UK can export to other EU countries without having additional charges or limits placed upon them. </li></ul><ul><li>The Globalisation of markets </li></ul><ul><li>Many people believe that national boundaries are no longer important for firms </li></ul><ul><li>Communication and travel are increasingly faster and make the world seem smaller. </li></ul><ul><li>MNCs who are global in outlook can take advantage of this so-called ‘global village’ </li></ul>
  7. 7. Advantages of MNCs to the Host Country <ul><li>They bring new jobs to an area; </li></ul><ul><li>Often at the forefront of new technology and can bring this to another country; </li></ul><ul><li>Often more efficient than local companies; </li></ul><ul><li>They can lead to the introduction of new management techniques; </li></ul><ul><li>Often export their output therefore help the Balance of Payments; </li></ul><ul><li>They can lead to new businesses being set up locally once people have learned new skills. </li></ul>
  8. 8. Disadvantages of MNCs <ul><li>They are very powerful and can influence the government of a country; </li></ul><ul><li>Local employment can be dependent on one large employer; </li></ul><ul><li>They may use up natural resources which may not be renewable; </li></ul><ul><li>They can force local firms out of business; </li></ul><ul><li>The profit they make goes back to the ‘home’ country; </li></ul><ul><li>They can be ‘footloose’ and may move to another country if better incentives offered. </li></ul>
  9. 9. MNCs and Social responsibility <ul><li>Often criticised for their marketing techniques, eg Nestle and baby milk; Marlboro targeting children </li></ul><ul><li>Safety issues, eg factories in a host country have lower standards than allowed in base country eg India </li></ul><ul><li>Impact on the environment, eg rainforests being destroyed </li></ul><ul><li>However they may offer higher wages than local organisations and they have the power, money and knowledge to help preserve the environment if they choose. </li></ul>
  10. 10. Government control <ul><li>Some people feel that MNCs have too much influence over governments. </li></ul><ul><li>In some countries MNCs avoid paying tax. </li></ul><ul><li>Some MNCs exert power on </li></ul><ul><li>politicians and decisions and </li></ul><ul><li>policies may be shaped to </li></ul><ul><li>suit them. </li></ul>
  11. 11. WORKSHEET <ul><li>Suggest reasons for establishing MNCs . (4) </li></ul><ul><li>Identify the features of a multi-national company? (2) </li></ul><ul><li>Explain the possible advantages and disadvantages to the host country of a MNC operating there? (6) </li></ul><ul><li>Suggest how Aberdeen has benefited from North Sea Oil. (3) </li></ul><ul><li>Outline disadvantages to Aberdeen of MNCs operating </li></ul><ul><li>there? (3) </li></ul>

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