Unit 4 Transnational Enterprises. Pre-reading activities Learning objectives Information related to the text Words and expressions Exercises.
Post on 18-Jan-2016
Unit 4 Transnational Enterprises
Pre-reading activities Learning objectives Information related to the text Words and expressions Exercises
Learning ObjectivesAfter studying this unit, you should be able to:1.understand correctly the effects of TNCs on social development2.know TNCs current situation3.have an overall idea of the strategies operating in some of the famous TNCs
Pre-reading ActivitiesA: I heard that youve left your company to work in New York for another company.B: No, thats not true. The one in New York is only a subsidiary of my company in China. Ive never left the same transnational corporation.
A: What do you mean by transnational?B: A transnational corporation is usually composed of a parent company located in the home country and several overseas subsidiaries which are engaged in producing and selling the same goods or services in other countries.
A: I am still thinking of international trade.B: They are different. Traditional international trade, which mainly involves import and export, can be traced back to Egypt of thousands of years ago, while the economic phenomenon of the multinational corporation is something after World War II. The rise and development of the transnational corporation is based on the international mobility of certain factors of production- capital, labor, information, and technology.Pre-reading Activities
1.Effects of TNCs on Social Development Economic GrowthTransfer of TechnologyInformation related to the text
Economic GrowthIn theory TNCs can promote social development by fostering economic growthIn practice it is unclear whether TNCs are actually responsible for economic growth in host countries. even if TNCs do improve a host countrys economy, the relationship between economic growth and social development is not so strong.
Foreign subsidiaries in host countryParent company in home countryTake most of their profits out of the countryNot reinvest them in the company
TNCs can hardly solve problemspovertyunemploymentOther issues of social problems
Transfer of technologyThe forms of technology transfer
The method of technology transfer
The forms of technology transferMachinery and equipmentSoft wareProcess and product designTraining in managementMarketing and quality control methods
The method of technology transferJoint venturesForeign direct investmentTechnical assistanceNon-equity investment
Technology transferIn theoryfoster social development in developing countries by transferring management skills as well as research and development capacities In practice
transferring only minimal management skills they conduct only a small number of such R&D outside Most of the technology transferred is often capital intensive and therefore inappropriate for labor-intensive developing countries, and can not meet local needs.
2. Strategic Management of TNCs three basic strategies: Generic strategy Competitive strategy Diversification strategy
Generic Strategy There are two primary generic strategies that companies use to gain competitive advantage: differentiation and low cost. Example:There is an evident example: In March 2005, Target Corporation (Target) had 1,330 retail stores in 47 statesof the United States. Even though it only had a fifth of the sales and profits of Wal-Mart , it had a loyal customer base that was looking for a trendy, yet, affordable range of merchandise. Target's customers, whom it referred to as 'Guests', were younger and more affluent than that of its rival Wal-Mart.
Target's positioning was based on more than just pricing; it encompassed quality, style, and trend. This was the differentiation strategy that was consistently applied since the launch of the chain. It differentiated itself from its competitors by offering trendy merchandise at affordable prices. By 2002, the company became the second largest discount retailer in US. Generic Strategy
Competitive Strategy offensive strategy-companies directly target rivals from whom they wish to occupy market share.
Defensive strategy-companies seek to beat back or discourage the offensive strategies of rivals.
Diversification Strategy : When a company moves from a single type of business into two or more business, this is called diversification strategy. two basic types: related diversification unrelated diversification
related diversification Example: IBM With an eye toward generating $1 billion (US$) in hardware, software and services revenue over the next three years, IBM announced that it has formed new alliances in the Internet banking, retail and insurance sectors. The pacts were formed as part of a diversification strategy. We want to partner with the application leaders in every industry and market segment and have them leading with IBM technologies, said Bob Timpson, general manager, IBM Solution Developer Marketing.
The recently announced IBM-Lenovo alliance will change the dynamics of the entire global PC marketplace. Because of the significance of the announcement, our customers may have questions about how this affects them and their relationship with IBM. related diversification
IBM shipped its first PC in August of 1981, over 22 years ago. In July 2004, IBM sold its 100 millionth PC. Over the last 12 months, IBMs PC business has seen double-digit revenue growth, outperforming the industry in key categories. related diversification
See what the analysts are saying: "IBM is a marquee name among businesses around the world, and Lenovo dominates China, the world's fastest-growing market. 'This new player is not to be underestimated,' said Gartner analyst Tom Bittman. 'This is going to become the No. 3 player.' " Austin American-Statesman, December 9, 2004 related diversification
An exciting future IBM and Lenovo both bring the spirit of innovation to the new company; it's the complementary strengths of each one that will create new value for PC customers. Watch this space for exciting products, services and technologies that will continue to raise the bar. The future is an exciting place to be. related diversification
Words and Expressions productivity n. entrepreneur n. layoff n. welfare n. facilitate v. semiconductor n.
subsidiary n. exclusively adv inappropriate adj.
volatility n. generic strategy diversification strategy affluent adj. affordable adj. offensive adj. Words and Expressions
Exercises TEXT A II
Exercises TEXT B III1. Industrial policies are different 3. from its competitors 2. TNCS in the late 1990s are confronted 5.with a series of strategy options 3. It differentiated itself 3. from its competitors 4. In a competitive industry, all managers should expect attacks 2. from rival firms.5. We want to partner 1.with the application leaders in every industry.
Questions are welcome!