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Transnational Corporations (TNCs)

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Title: Transnational Corporations (TNCs)


1
Transnational Corporations (TNCs)
  • Ph?m Th? Hu?nh Nhu BABAIU10103
  • Lê Th? Nhu Thu? BABAIU10026
  • Nguy?n Bá H?i B?ng BABAWE10531
  • H? Vi?t Dung BABAIU10013
  • Lê Chung Thanh Th?o BAIU09495
  • Lê Hoàng Anh Thu BABAIU10170
  • Lâm C?m Ng?c BABAIU10184
  • Hoàng Tr?n Ð?c H?ng BABANS10657
  • Tr?n Ng?c Hi?n BABAIU10209
  • Nguy?n Phuong Th?o BABAIU10217

2
OUTLINE
  • History of TNCs
  • The Organizational Structure
  • The rises of TNCs in the 21st century
  • Example

3
Transnational corporation
  • A transnational corporation (TNC) is a huge
    company that does business in several countries.

4
Examples
  • Cadbury-Schweppes
  • BP-Amoco
  • Nestlé
  • Unilever

5
From the Origins to the Second World War
Brief history of TNCs
6
During the 19th and early 20th centuries
  • The search for resources including minerals,
    petroleum, and foodstuffs.
  • For example
  • The US agribusiness giant United Fruit Company
    controlled 90 per cent of US banana imports by
    1899.
  • Royal Dutch/Shell accounted for 20 per cent of
    Russia's total oil production.
  • In Japan Mitsui and Mitsubishi financial
    clique

7
1945 to the Present
8
Proliferation of TNCs
9
The wealth of TNCs
  • Top 100 firms which in 1992 had US3.4 trillion
    in global assets.
  • The top 100 TNCs also account for about one-third
    of the combined outward foreign direct investment
    (FDI) of their countries of origin.
  • Between 1988 and 1993, worldwide FDI stocks grew
    from US1.1 to US2.1 trillion

10
TNCs investment in the less-industrialized world
in the mid-1980s
11
Foreign investment into less-industrialized
nations
12
The Organizational Structure of a Multinational
Company
  • This is most important tasks for top managers of
    any company.
  • If everyone in a company is in place and knows
    his duties, if there are rules of interaction
    between departments, company's activities will
    remind a tuned mechanism which works with maximum
    results and minimal costs.
  • Michael Newman

13
Organizational structure
  • A scheme consisting of units and individual
    officers of the company.
  • Located by levels of importance and
    responsibility.
  • Depending on the stage of company development
    require different approaches to build the
    organizational structure.

14
Subsidiary Model
  • The most basic structural models
  • The subsidiaries are self-contained units with
    their own operations, finance and human resource
    functions.
  • Allowing them to respond to local competitive
    conditions and develop locally responsive
    strategies

15
Subsidiary Model
  • The major disadvantage
  • The decentralization of strategic decisions that
    makes it difficult for a unified approach to
    counter global competitive attacks.

16
Product Division
  • Each product has its own division that is
    responsible for the production, marketing,
    finance and the overall strategy of that
    particular product globally
  • Allows the multinational company to weed out
    product divisions that are not successful

17
Product Division
  • The major disadvantage
  • The lack of integral networks that may increase
    duplication of efforts across countries.

18
Area Division
  • Each geographical region is responsible for all
    the products sold within its region.
  • All the functional units for that particular
    region namely finance, operations and human
    resources are under the geographical region
    responsibility
  • Allows the company to evaluate the geographical
    markets that are most profitable.

19
Area Division
  • The major disadvantage
  • Communication problems, internal conflicts and
    duplication of costs

20
Functional Structure
  • Functions such as finance, operations, marketing
    and human resources determine the structure of
    the multinational company
  • All the production personnel globally for a
    company work under the parameters set by the
    production department

21
Functional Structure
  • The advantage
  • There is greater specialization within
    departments and more standardized processes
    across the global network.
  • The disadvantages
  • The lack of inter department communication and
    networking that contributes to more rigidity
    within the organization.

22
Matrix Structure
  • Overlap between the functional and divisional
    structures.
  • Dual reporting relationships in which employees
    report both to the functional manager and the
    divisional manager.
  • Involve cross-functional teams from multiple
    functions such as finance, operations and
    marketing

23
Matrix Structure
  • The advantage
  • There is more cross-functional communication that
    facilitates innovation ? The decisions are also
    more localized.
  • The disadvantage
  • More confusion and power plays because of the
    dual line of command

24
Transnational network
  • Evolution of the matrix structure
  • More on horizontal communication.
  • Information is now shared centrally
  • This structure is focused on establishing
    "knowledge pools" and information networks that
    allow global integration as well local
    responsiveness.

25
The rises of TNCs in the 21st Century
26
1.General view of the Rises of TNCs in the 21st
Century
  • In the 1980s and 1990s
  • In 21st Century
  • Globalization was largely driven by economies of
    the developed world
  • United States, Western Europe and Japan
  • Large multinational companies headquartered in
    developing countries
  • China, Brazil and India
  • This trend is becoming more pronounced which
    impacted many developed economies.

27
  • Exhibit 1 Cross Border Purchases by Developed
    and Developing Economies

28
  • Exhibit 2 Cross Border Purchases by Emerging and
    Transition Economies in Developed Economies

29
  • Exhibit 1 and 2 show
  • The share of cross-border buy-side transactions
    by developing economies.
  • Asian developing countries being the major force
    for this change.

30
  • Some major mergers and acquisitions across
    sectors like oil and gas, mining, automotive and
    financial services
  • E.g.
  • The Indian conglomerate Tata Sons' acquisition of
    UK-based Corus Steel and Jaguar Land Rover
  • China-based Geely Automotive's takeover of
    Swedish auto giant Volvo
  • Mexican cement manufacturer CEMEX's acquisition
    of Australian cement company Rinker Group.

31
  • According to the United Nations Conference on
    Trade and Development (UNCTAD)
  • There were 80,000 transnational corporations
    (TNCs) in 2009
  • During the last few years, while developed
    countries accounted for the bulk of the TNCs
    across the globe, a paradigm shift has been
    occurring.
  • The transnationalisation of emerging market firms
    reflects the maturity in their business processes
    and their increasing appetite for international
    growth.

32
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33
The diagram shows the network of the 295 TNCs
among the top holders in 21th century
34
2.Factors driving the rise of TNCs in the
emerging markets
  • Exhibit 3 Motivations for Investments for Firms
    from Emerging Markets

35
Market Seeking
  • To reduce the risks associated with being
    overdependent on limited market presence
  • To increase their market presence as well as
    achieve economies of scale

36
Market Seeking (cont.)
  • E.g.
  • In 2006 the China-based TCL Corporation's
    acquisition of Thompson and the acquisition of
    US-based IBM's PC business by China's Lenovo
  • In 2007, the leading Mexico-based cement
    manufacturer CEMEX gained a controlling stake in
    Australian counterpart Rinker Group for USD 14.7
    billion gt CEMEX also expanded its geographic
    presence in Australia and the Asia Pacific region

37
Resource Seeking
  • Many enterprises from emerging countries are in
    search of natural resources across the globe.
  • They acquire strategic resources worldwide for
    oil, minerals and other raw materials gt
    transnational routes also help enterprises
    internationalize and integrate their production
    facilities globally.

38
Resource Seeking (cont.)
  • E.g.
  • In 2006, Brazilian mining giant Vale acquired
    Canadian-based Inco, the largest nickel mining
    and processing company, thus expanding its
    production facilities in North America.
  • Indian petrochemical giant Reliance Industries
    Ltd acquired the shale gas assets of US-based
    Atlas Energy for almost USD 3.5 billion in early
    2010 gt Reliance now has the first mover
    advantage in exploring the

39
Efficiency Seeking
  • Corporations need to operate more efficiently and
    to increase productivity by vertically or
    horizontally integrating their processes.
  • Many firms from the emerging markets are
  • Reassessing their internal operations and their
    roles in the global value chain.
  • Investing in the developed economies to achieve
    efficiencies.

40
Efficiency Seeking (cont.)
  • E.g.
  • In 2006, the acquisition of UK-based Corus Steel
    by Indian steel manufacturer Tata Steel
  • Brazilian aircraft manufacturer Embraer acquired
    aircraft maintenance, repair and operations (MRO)
    service provider OGMA in Portugal.

41
Transnational horizon As we see it
  • Developing markets had a construct to be among
    the top economies by middle of the 21st century.
  • In line with their growth ambitions, many of
    these emerging market firms have expanded their
    horizons to developed economies and started to
    take the route of cross-border acquisitions.
  • Be able to leapfrog the maturity curve gt to
    match the needs of the developed markets in terms
    of
  • Technology and management advancements,
  • Quality standards and certification,
  • Most importantly, to overcome the psychological
    barriers with respect to brand perception.

42
3. Transnational horizon As we see it (cont.)
  • E.g.
  • The Asian giants (China and India) along with
    Latam (Brazil) would dominate the cross-border
    firm creation scene gt lead to a changing
    landscape of global economics, where there would
    be a gradual shift of corporate appetite for
    transnational growth from the developed to the
    developing markets

43
eSys Information Technologies Pvt. Ltd. 
  • eSys Information Technologies Pvt. Ltd. is
    the world-leading information technology company,
    and business process outsourcing organization
    that envisioned and pioneered the adoption of the
    flexible global business practices that today
    enable companies to operate more efficiently and
    produce more value. Efficiency, reach and adapta
    bility are the core values that
    define eSys business model for IT distribution.
    Since its incorporation in Singapore in the year
    2000, eSys has set a scorching pace to become a
    major IT component distribution network in Asia
    and Europe with 32 in-country subsidiaries and
    more than 100 points of presence. With the
    presence in 32 countries and across 100 plus
    outposts the entire enterprise is run on one
    simple phrase Constant innovation that
    maximizes efficiencies to deliver enhanced value
    to our customers.eSys PC has already been
    launched in India, Middle East, Korea, UK and USA.

44
Relax,its FedEx.
  • We live to deliver.

45
Introduction
46
Functional Structure
  • The FedEx Corporation is the parent company over
    all the others, which provide support to all of
    the other companies
  • FedEx Express
  • FedEx Ground
  • FedEx Office
  • FedEx Freight
  • FedEx Custom Critical
  • FedEx Trade Networks
  • FedEx Supply Chain
  • FedEx Services

47
Details of Functional Structure Units Logos
48
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49
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50
Area Structure
FedEx Express A wholly owned company of FedEx ,
which is divided into five global regions
  • Asia Pacific (APAC)
  • Canada
  • Europe, Middle East, Indian Subcontinent and
    Africa (EMEA)
  • Latin American and the Caribbean (LAC)
  • United States

51
FedEx Ground Area
52
FedEx Timeline
53
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54
Values
55
Strategy
56
Business Profit and Development
Revenue US 34 billion (2010)
Operating income US 2.075 billion (2008)
Net income US 1.2 billion (2010)
Total assets US 25.633 billion (2008)
Total equity US 14.526 billion (2008)
Employees 280,000 (2009)
57
Achievements
58
The World On Time.
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