Role of Transnational Corporations in Global Systems

TNCs have the effect of ‘grouping’ nations together systematically through both their production and supply chains and via the different markets they serve with products.

For example:

• The UK and Malaysia are linked together by the TNC Dyson. The famous bag-less vacuum cleaners are designed and sold in the UK but manufactured in Malaysia.
• Viewed from a market angle, ‘easyJet countries’ can also be mapped via countries that are destinations/origins for easyJet flights.

The actual methods that TNCs use to develop their leading role in global systems can be a complicated business.  Complexity may manifest itself in the following ways: 

• The executives of TNCs may build their businesses up by buying foreign firms. These are called mergers and acquisitions. For instance, the Irish beer manufacturer Guinness merged with Grand Metropolitan in 1997 to form the world’s largest producer of spirits, the giant drinks TNC, Diageo, with its HQ in London.
• Much of the manufacturing work done in so-called ‘sweat shops’ is not actually conducted in buildings owned by the TNC or using labour that has been directly employed. Instead the work has been sub-contracted to a third party. This is what makes it hard to enforce good working conditions in factories where global brands are made. Employee-exploitation may be carried out far down the supply-chain.
• Most manufacturing TNCs are assembly industries, relying upon a chain of interconnected upstream and downstream suppliers. Some suppliers may be independent sub-contractors, some may be owned by the parent company. For instance, the Mini factory in Oxford is owned by the German firm BMW.  A vast 2,500 different suppliers provide parts to assemble the Mini, from the engine right down to the windscreen-wipers, sending them to the main Oxford assembly plant.