Geography : chapter 2 Territorial strategies of transnational corporations (TNCs)

Transcription

1 Introduction > What s globalization? the process by which regional economies, societies, and cultures have become integrated through communication, transportation, and trade. > What s a TNC? Companies that operate in at least two countries are called transnational corporations (TNCs). A TNC is engaged in various business activities (sales, distribution, extraction, manufacturing, and research and development). The TNCs have got a major role in globalisation. They reinforce by their activities the links between the different economic regions of the world. 25 % of the global GDP 66 % of the global trade

2 How are the TNCs transforming territories by their strategies? II/ The territorial strategies of transnational corporations (TNCs)

3 This map compares the size of the stock exchanges (market capitalisation) of developing countries to the market value of some TNCs from the developed countries. Source : The economist website, 18 th january 2014

4 Key facts about Nestlé Swiss company (born in 1874) World s largest food and nutrition company 121 countries / employees / 6000 brands 97.8 % of sales in foreign countries (outside Switzerland) Annual turnover (revenue) in 2013 : 104 billion of dollars 15 th biggest world s TNC (revenue in 2012) Nestlé s revenue = twice the size of the GDP of Ethiopia (42 billion of dollars in 2012) a country of 93 million people Four times the GDP of Côte d Ivoire (25 billion and 22 million people)

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6 1/ What can you say about the power of the TNCs in comparison with developing countries? All the TNCs on the document are from developed countries They are very powerful as Nestlé = all the Indian Stock exchange for example This map compares the size of the stock exchanges (market capitalisation) of developing countries to the market value of some TNCs from the developed countries. Source : The economist website, 18 th january 2014

7 2/ What is the role of developed countries in the Nestlé strategy? 85 % of the shareholders from developed countries = benefits are going to the north 56 % are European.

8 2/ What is the role of developed countries in the Nestlé strategy? Between 15 and 20 R and D centers are in Europe and North America (only 8 in the rest of the world)

9 2/ What is the role of developed countries in the Nestlé strategy? 50 % of the sales in developed countries. (45918 / millions CHF)

10 2/ What is the role of developed countries in the Nestlé strategy? Developed countries are controlling the benefits (85 % of shareholders at least) They are controlling the R and D (2/3 of the research centers) They are important markets (50 % of sales at least)

11 3/ What is the role of developing countries in the Nestlé strategy? Important production area : One third of the factories are located in developing countries (even if there are developed countries in this area : Japan and Australia for example)

12 3/ What is the role of developing countries in the Nestlé strategy? Important markets : 5 on the 15 countries in the top sales of Nestlé Important sources of raw materials (document 5) : Ivory coast = «nearly half the world s cocoa»

13 4/ Why are emerging countries so important for the strategy of TNCs as Nestlé? Emerging countries = BRICS (Brazil, Russia, India, China, South africa) Emerging countries = high growth markets Emerging countries = potential investors (China = 2.48 % of the shares of the company see doc 3).

14 5/ What are the limits to the power of Nestlé? Nestlé is exposed to critics = child labour in Ivory Coast (documentary doc 5) Nestlé is very careful with its image (doc 6). Other controversies In 2002, Oxfam denounced the fact that Nestlé asked 1.5 million dollars to the Ethiopian state (for a debt) while the country faced a famine. Nestlé is forced to accept a better deal. Greenpeace launched in 2010 a campaign against Palm oil use which provoked indirectly deforestation in Indonesia : Nestlé is directly accused. Nestlé promised to use palm oil produced in better conditions.

15 5/ What are the limits to the power of Nestlé? Poster from the Greenpeace s campaign against Nestlé (Kit Kat) in 2010

16 Conclusion How is Nestlé using globalisation? Nestlé is using the international division of labour : Developed countries : R and D, sales Developing countries : raw materials and production Emerging countries : new markets and investors Nestlé is still a very european company More than half of the profits and the sales are located in Europe. Switzerland captures one third of the profits for only 2 % of the sales. Nestlé s power is limited The slogan of Nestlé «good food, good life» = company exposed to critics Food is a very sensitive market and Nestlé must be very careful not to shock the world s opinion.

17 FL2 FL3 II/ Territorial strategies of the TNCs A/ Powerful TNCs Top 20 world s TNCs by foreign assets(source : The economist, 10th july 2012)

18 Diapositive 17 FL2 FL3 > The domination ot northern TNCs Frédéric Ledru; 13/03/2017 TNCs are involved in all kind of activities (agriculture, mining, industries and services). Frédéric Ledru; 13/03/2017

19 II/ Territorial strategies of the TNCs A/ Powerful TNCs

20 II/ Territorial strategies of the TNCs A/ Powerful TNCs Xi Jinping (Chinese president) François Hollande (French president) Signature of an agreement between Xu Ping (Dongfeng) and Philippe Varin (PSA Peugeot Citroën), march 2014

21 II/ Territorial strategies of the TNCs B/ Using territories at a global level > New international division of labour for the TNCs Developed countries sales benefits R and D production Emerging countries production sales raw materials R and D Poorest developing countries raw materials sales Investment (FDI) Raw materials Products Benefits

22 > New division of labour

23 > Securing raw materials

24 > Conquering new markets

25 II/ Territorial strategies of the TNCs C/ Transforming territories at a local and regional level > Transforming national territories

26 II/ Territorial strategies of the TNCs C/ Transforming territories at a local and regional level New York > TNCs and global cities London Paris Tokyo Shanghai Sao Paulo

27 Conclusion TNCs are key factors of globalisation and they are transforming territories at every scale. They are powerful and their strategies are diverse. At a global scale > New International Division of Labour (Developed, emerging and developing countries ) transforms relations between regions of the world. At a regional scale > they favour the development of free trade zone (EU, NAFTA) At a national scale > they reinforce the power of coastal regions and reinforce the economic specialisation At an urban scale > they reinforce the power of global cities