Title: Transnational Corporations (TNCs)
1Transnational Corporations (TNCs)
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- 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
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- Nguy?n Phuong Th?o BABAIU10217
2OUTLINE
- History of TNCs
- The Organizational Structure
- The rises of TNCs in the 21st century
- Example
3Transnational corporation
- A transnational corporation (TNC) is a huge
company that does business in several countries.
4Examples
- Cadbury-Schweppes
- BP-Amoco
5From the Origins to the Second World War
Brief history of TNCs
6During 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
71945 to the Present
8Proliferation of TNCs
9The 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
10TNCs investment in the less-industrialized world
in the mid-1980s
11Foreign investment into less-industrialized
nations
12The 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
13Organizational 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.
14Subsidiary 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
15Subsidiary Model
- The major disadvantage
- The decentralization of strategic decisions that
makes it difficult for a unified approach to
counter global competitive attacks.
16Product 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
17Product Division
- The major disadvantage
- The lack of integral networks that may increase
duplication of efforts across countries.
18Area 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.
19Area Division
- The major disadvantage
- Communication problems, internal conflicts and
duplication of costs
20Functional 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
21Functional 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.
22Matrix 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
23Matrix 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
24Transnational 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.
25The rises of TNCs in the 21st Century
261.General view of the Rises of TNCs in the 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.
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33The diagram shows the network of the 295 TNCs
among the top holders in 21th century
342.Factors driving the rise of TNCs in the
emerging markets
- Exhibit 3 Motivations for Investments for Firms
from Emerging Markets
35Market 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
36Market 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
37Resource 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. -
38Resource 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
39Efficiency 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. -
40Efficiency 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.
41Transnational 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. -
423. 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
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44Relax,its FedEx.
45Introduction
46Functional 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
47Details of Functional Structure Units Logos
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50Area 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
51FedEx Ground Area
52FedEx Timeline
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54Values
55Strategy
56Business 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)
57Achievements
58The World On Time.