Definiton: Those companies the activity of which pass the borders of their country, thus they do not produce their products in only one certain country, but in the whole world economy. They establish subsidiaries or contain companies in different countries. Sometimes they are called multinational companies („multi”), but a company is actually called „multi” if its owners are from different countries.
Summary: - passes the borders of its country
- produces in the whole world economy
- sells its products at the world market
- establishes subsidiaries
- is called „multi” sometimes
Aim: They locate certain activities to certain countries or regions in order to decrease the budget of production to the minimum and increase the profit to the maximum.
Reason for their establishment: the world economy became worldwide in the 1970’s oil crisis of the 70’s a companies had to recognize the demand of the consumers a they have to take the appropriate product to the market fast competition have to be able to produce the goods on the lowest price they locate the factories to different places where the certain part of production is the cheapest
Consumers’ demand: goods produced in relatively short series, and those change fast a need of fast reaction a flexible (rugalmas) production
Large-scale development of communication a condition of the worldwide location of production
a possibility for the transport of capital in a short time
General Characterization:
1.) After the World War II: - companies had subsidiaries abroad
parent company subsidiary
decision production
research & technology
2.) Nowadays: transnational companies + their subsidiaries = integrated network of
production
parent company subsidiary
headquarters of the company production
decisions are made here
control of planning
control of research and development
control of market research
Operation system of the TNCs
market research & marketing | close to the consumers’ market |
research & development | close to the large cities containing universities |
production | all over the world |
production of basic materials | in developing countries, close to the raw- material and energy („kéményes ipar”) |
production of components (részegységek) | anywhere where there is cheap, but skilled labour force and tax allowance (adókedvezmény) |
production of the end product (végtermék) + assembly (összeszerelés) + marketing (értékesítés) | near the consumers’ market |
The basic condition for this system is the modern infrastructure. The activity of the TNCs is followed by the flow of functioning capital a strengthens the role of financial sector
Competition between TNCs a they spend much on Research + Development
a they always change their park/site (telephely) according to
the beneficial possibilities of world economy
a dispersion (szétszórtság) is characteristic
creates possibility for work
As the role of national economies role of TNCs grow
decreases
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