Why has the TNC transnationalized?
Type or Focus of TNC
Market Access
Sourcing Efficiency
Natural-resource extracting
To sell wherever there is effective demand
To seek low-cost access to raw materials
To seek sites to grow food, flowers, and fuel
To avoid environmental and labor regulations
Manufacturing
To sell wherever there is effective demand
To access cheaper labor
To benefit from economies of scale and scope
To benefit from reduced taxes and regulations
And/Or
To access labor with special skills
To benefit from tax-funded infrastructure, education, and business subsidies
To create global supply-chain synergies between production and sales
Banking and other business services
To open and profit from new capital markets, and sell services to other TNCs
To access strategic assets, knowledge workers, and networks
To avoid national banking rules
To hedge on and profit from variation in transnational risk and its pricing
Transportation and communications
To facilitate and profit from transnational ties
Tourism, sports and entertainment
To profit from connecting consumers and transnationalized cultural commodities
Table 2: How?
How has the TNC transnationalized?
Type or Focus of TNC
Foreign Direct Investment
Both new “greenfield investments” and “mergers and acquisitions” (M&A)
Outsourcing
Including captive supplier, modular, relational, and fully marketized commodity chains
Natural-resource extracting
Historic ties to colonial control and exploitation;
Contemporary FDI through greenfield investments and M&A
Sourcing from “captive-supplier” producers and plantations
Strategic alliances with other firms
Manufacturing
Historic MNC investment was made to make products inside foreign markets
Contemporary FDI is made more on the basis of costs and may involve building a sales support infrastructure rather than factories
Historic “joint ventures” and “captive supplier” ties that anticipate today’s market-mediated ties
“Post-Fordist” manufacturing commodity chains, including modular, relational, and marketized
Banking and other business services
Facilitating FDI and M&A activity, along with advertising, accounting, legal, and consulting support for other TNCs
Facilitating the securitization, contracts, and business organization of outsourced supply chains (including through foreign portfolio investment practices)
Transportation and communications
Building on historic political and economic ties with contemporary technology
Renting satellites, fiber optic networks, and cloud space for communications
Renting planes, trains, trucks, and ships
Tourism, sports and entertainment
FDI through both green-field and M&A investments
Contracting with local suppliers of hotels, recreational services, and media
10-Step TNC Research Report Guide
Step 1: Identifying your TNC
I. Review at least seven of the resource sites listed above.
II. Next, review at least five websites of TNCs.
III. Now identify one of the corporations above as your object of study.
Remember your key task is to answer the four main questions about the TNC: when, where, why, and how has it globalized? So pick a TNC that you are interested in, but also one that you think will be easy enough to research. If you decide to focus on a large industrial company that produces an especially wide range of products (e.g. GE or Mitsubishi), you may want to focus on just one product line (e.g. appliances or cars) rather than everything the TNC makes and sells.
Step 2: Your TNC’s Global Image
I. Research the website of your chosen TNC as carefully as possible. Take note of how it presents itself. What signs and images associated with globalization does it use to market itself or its products?
• Keep asking questions. What is the TNC trying to accomplish by using these global images? Is it marketing itself or its products to customers? Is it marketing itself to shareholders? Is it sending messages to governments or unions that it is globally mobile?
• List some of the signs and images you find in your research and write two or three sentences about each.
II. Write a 1-page report on how the corporation uses global images and arguments. If it doesn’t do this, ask yourself why.
Step 3: Company Reports on your TNC
Some possible ways to find company reports:
• The TNC website may itself have back issues of summary reports.
• If the company is publicly traded in the US (listed on a stock market), use the SEC’s EDGAR system to find and read its public reports. Another option is to call the company’s shareholder relations office and ask if they have an annual report.
List the titles and sources for your company reports.
Step 4: Answering the Why, How, and Where questions
It’s time now to conduct substantial research into your corporation. You’re going to tackle a number of issues at once, so give yourself plenty of time.
I. Why is your TNC globalizing?
• Is it to produce and/or source goods more cheaply (“sourcing efficiency”)?
• Is it to reach a bigger market (“market access”)?
• Is it for both sourcing efficiency and market access?
• Or has the TNC always been globally organized because of its product, e.g. oil?
A. If the TNC is globalizing to reach a bigger global market, investigate how it’s trying to expand its market share. Make two lists:
What countries is it targeting as future markets for sales?
What investments (new retail outlets, new supply chains and so on) is it developing?
B. If your TNC is globalizing in order to produce or source goods more cheaply, try to identify what parts of the production process it is offshoring and to where.
II. How has your TNC globalized?
Determine the extent to which each of the following four general TNC globalization methods has been involved in the global expansion of your TNC and write a few sentences about the details (for example, specifically what kind of facility or contract, when it was established, and where)
A. FDI – foreign direct investment in everything from retailing outlets to new factories and new offices (common in producer driven commodity chains);
B. mergers and acquisitions of foreign companies;
C. market-mediated outsourcing ties with foreign vendors, franchises, and producers (common in market-driven commodity chains);
D . sales expansion overseas finding new markets and/or adapting products for foreign markets.
Write a preliminary 3-page report on whether the corporation is globalizing mainly for market access reasons, for sourcing efficiency reasons, or for some complex mix of the two.
Step 5: Investigate labor issues in the TNC
? What are the pay levels at the headquarters for the CEO and management?
? What are the pay levels at the main points along the production network?
? What is the gender pattern in hiring in these different levels/places?
? What labor organizing has been conducted within the TNC?
? Have there been any transnational union campaigns on the TNC?
Be sure to search the free corporate monitoring sites noted above, but in addition you can explore further labor complaint and campaign details at the following sites, too:
Union and labor action resource list from Multinational Monitor
Corporate Accountability and Workers’ Rights
Labor Education in the Americas Project
International Labor Rights Forum
International Labor Organization
Industrial Workers of the World
Women Working Worldwide
Workers Rights Consortium
Maquila Solidarity Network
Ethical Trading
Anti Slavery
Labor Notes
USAS
Step 6: Investigate the TNC’s financial facts
Graphs of share or equity prices for most publically traded TNCs can be found easily at the following financial news sites:
Financial Times
Google Finance
Yahoo Finance
MarketWatch
Bloomberg
Reuters
MSNBC
Forbes
Most of these sites allow you to graph the changing prices over different periods of time. So find the time period that best fits your overall account of the TNC’s globalization story, rather than just the recent day-by-day market highs and lows. Be sure in turn to be explicit about the time period you are using in your own graph.
If you want to nuance this financial side of your TNC’s globalization story you may also want to dig deeper into any of the following details, too:
a) its price-to-earnings ratio over time (where a higher number tends to reflect stock market speculation pushing up the stock price in relation to the TNCs actual earnings);
b) the changing risk ratings for the TNC’s corporate bonds;
c) news stories about the TNC using bond-based borrowing to buy-back its own stock and push up its stock prices (and thus possibly bonuses for its managers);
d) news stories on how the TNC may be engaged itself in various forms of lending, renting, and financial services as a way of accessing or managing new markets.
Step 7: Find at least two academic articles or books that discuss the TNC
A scholarly article is different from a newspaper story, Wikipedia entry, or magazine article in so far as it has normally been subject to a process of peer review and professional editorial revision prior to publication. This means that such articles tend to be more reliable in terms of factual findings, as well as more theoretically sophisticated in terms of framing the significance of the facts. As a result, articles published in scholarly journals commonly offer useful references that you can follow-up in order to find other research relating to the same or similar topics. At the core of such academic publishing, scholars commit themselves to sharing their research results and theoretical reflections as openly and transparently as possible. Whether they are natural scientists, social scientists, or scholars inspired more by interpretative work in the humanities, they share a commitment to inviting others to test or otherwise challenge their claims in an open and ongoing academic conversation. This in turn tends to distinguish scholarly articles from the sorts of private research conducted by TNCs themselves (which is often not released in order to protect privatized intellectual property).
Write a 1-page summary of each scholarly article you read relating to your TNC, noting:
a) its main argument;
b) its author’s disciplinary and theoretical approach;
c) its author’s perspective;
d) the source and type of data used to make the argument.
Step 8: Write a first draft of your research report on your chosen TNC
The report must explain when, where, why, and how the TNC has globalized over a particular period of time. You must make this period of time clear in the title of your paper (e.g. “The global expansion of Coca-Cola from 1945 to 2000”). Ideally the draft of the paper should cite and discuss at least two academic articles relating to the company or its sector. High quality papers will additionally address the quantitative growth in the TNC’s earnings, its changing share price over the same period, and any data you have discovered relating to its labor practices and pay rates for both workers and executives.
Here’s a checklist of things that your report must do:
? Does your report explain where, why, when, and how the TNC has globalized?
? Is the period of time clear in the title of your paper and first paragraph?
? Does your draft paper cite two or more academic articles relating to the company?
? High-quality papers will additionally address:
a) the quantitative growth in the TNC’s earnings;
b) its changing share price over the same period;
c) its labor practices; and
d) its pay rates.
Step 9: Research and map the mobility of the TNC
Has the company sought to use the prospect of mobility or has it invoked free-trade rules to make a government do what it wants? One way to do this is to investigate what subsidies states and local governments have given to a TNC. Another good option is to search the newspapers of the city or cities in which the TNC has offices, factories, or other facilities. Here you might find stories about how the TNC extracted these local subsidies and tax breaks using particular threats of mobility and job loss. In either case, compare the threats and discourse about mobility with the actual global networks created by the company, and one way to do this is by mapping those networks following the guidelines of the Mapping Globalization exercise.URL to be updated
Step 10: Fully revise and finalize your research report
Please note this is only a guide to help you write your paper. Don’t let it be a straitjacket (golden or otherwise)! It looks longer and more demanding than it actually is. So remember, it is meant to be helpful, not intimidating. Ultimately, what matters is that you answer the four basic questions set at the beginning, namely: when, where, why, and how has the TNC globalized?
AS YOU SIT DOWN TO WRITE EACH PART OF YOUR PAPER, LOOK AT THE GUIDES FOR EACH SECTION DESCRIBED BELOW. AT THE END OF EACH SECTION GUIDE, THERE IS A LIST OF QUESTIONS WHICH YOU MIGHT ALSO WANT TO USE AS A CHECKLIST TO SEE IF YOU’VE LEFT ANYTHING OUT.
INTRODUCTION
In your introduction, try to capture in the first paragraph the “big story” about your TNC’s global development. If the most interesting thing about the TNC is its search for cheaper inputs and efficiencies, then highlight some of the most dramatic moves it has made to access cheaper labor, less expensive taxation regimes, a low-cost subcontractor, etc. If, instead, the more interesting aspect of the TNC’s global strategy is its search for bigger markets, list some of these and, if possible, capture with a few notable statistics how they have increased in number and scale. If the TNC is working on both of these fronts at the same time, try to highlight how this adds up to an overarching global strategy, or, failing that, how it might seem to illustrate more general global trends. Be sure to explain why you think the TNC is significant as an example of business trends in the context of economic globalization. In the second paragraph of the introduction, outline the nature of your research: what sources of information you considered, who you successfully contacted, and what big challenges you faced. In the third paragraph, outline the plan for the rest of the report. Detail what issues you will discuss first, second, third, etc. And note how this plan will enable you to answer the main questions of where, when, why, and how your TNC globalized. If you have not done so already, use this paragraph to note the time horizon over which you are discussing the TNC’s evolving global development.
Checklist
1. What aspects of globalization does your TNC exhibit?
2. Has it mainly gone global searching for markets or sourcing efficiency?
3. What sorts of commodity chains has it used?
FIRST MAIN SECTION [THE “WHEN” AND “WHERE” SECTION]
Start with the most compelling or remarkable aspect of your findings. For example: over the last 10 years, Starbucks has established x new outlets in y countries; or, Nike’s global strategy has sought efficiencies and cheaper inputs by sourcing more of its products from Southern China instead of SE Asia. This paragraph should make clear both the “when” and “where” of the developments that have interested you. In terms of the “where,” this section would also be a good place to use any maps you have been able to create. If you do this, you could then use the map to organize a more developed discussion of how the “where” of the TNC’s global strategy has evolved over the chosen period. Or relatedly, you might use two maps to compare and contrast how the TNC’s global sourcing networks compare with its global markets. If the TNC’s geographical development has varied from one place to another, this section would also be a good place to discuss this.
Checklist
1. What time period(s) is your paper addressing?
2. What periods were times of global expansion vs. retraction for the TNC?
3. What social forces influenced the globalization of your TNC over time?
4. What have the readings taught you about what was happening in the global economy at these times (e.g. the transition from Fordism to post-Fordism)?
5. Which countries did the TNC locate in? What particular places in these countries?
6. What countries does your TNC produce or manufacture their products in?
7. What countries does your TNC sell their products to?
8. What countries do they both market and produce products in?
9. Where do the raw materials come from?
10. What is the overall shape of the TNC’s global commodity chains?
SECOND MAIN SECTION [THE “WHY” SECTION]
Having introduced the “where” and “when” in the first section, move on now to the “why” question. Try to explain what you have identified as the key reasons for the TNC’s global expansion. Begin by answering the why question in the broad terms introduced in the course: has the TNC gone global for market access or sourcing efficiency reasons? Then explain what particular aspect of these rationales has appeared most important. In your explanation, try to explain, too, how this relates to the particular economic sector the TNC is within. Be sure to note also any peculiarities of your TNC that might make it do things differently. Consider how the changing global context has effected the TNC’s global development. How you deal with this question will depend on what time horizon you have elected to use to frame your analysis. If you are dealing with the whole of the twentieth century, you may want to consider the differences between the Fordist and post-Fordist contexts. If you are dealing with the last 20 years, you may want to consider the differences between the relation boom years of 1990s and the early twenty-first century, or between the latter and the more economically depressed period since 2008. In any event, use this section to underline your knowledge and understanding of how the TNC has changed according to changing times and contexts. This “why” section may also be the time to discuss academic articles that have dealt with the global economic and political factors affecting your specific TNC. Examples might be academic discussion of
the effects on the TNC (or its general economic sector) of new free-trade rules, or the disruptive impact of a war or currency crash.
Checklist
1. What motivated your TNC to globalize: market access or sourcing efficiency?
2. What social and legal contexts shaped the globalization of your TNC?
3. What have the readings taught you about these processes?
THIRD MAIN SECTION [THE “HOW” SECTION]
It should be quite easy to move now to the topic of “how” your TNC has globalized. Has it used FDI? Or subcontracting systems? Or mergers and acquisitions? Once you have identified the main strategies it has used, attempt to outline some good examples of how it has done this in real places. Ideally, include a map or table locating or listing these places. If you can find a graphic illustrating one of its factories or retail outlets overseas, include that, too. If you have found other additional kinds of information, you can now also nuance your account of “how” the TNC has globalized by further discussing its impacts on the people and places involved. Equally, you might be able to outline here how the global strategy is viewed or implemented by personnel within the TNC. Or you may want to cite its changing share price over the years you are considering to illustrate how the TNC’s global developments have been viewed by shareholders. If you can also list any of the pay rates for any of the employees, so much the better. If you can highlight differences between pay at the headquarters and pay and conditions in overseas factories, and if you can comment on the reasons for these differences, it will be very valuable. If some remarkable external factors have also affected the ways in which the TNC has globalized (for example, direct government support) note that here. Or if the company has some special feature that has made it globalize in a fairly unique way, then note that.
Checklist
1. Through what methods did your TNC globalize: FDI, market merger, or subcontracting/outsoucing?
2. How does your TNC market itself? Does it present itself as a globally mobile company?
3. What type of commodity chain does your company exemplify (Table 3.1, page 77, of Introducing Globalization)
4. How has your TNC been received in other countries?
5. How have your TNC’s earnings (quantitative growth) and share prices reflected the globalization of your company?
6. What have the readings taught you about these processes?
FOURTH MAIN SECTION [THE CATCH-ALL SECTION]
Use this last main section to try and interpret any notable peculiarities of your TNC and its global development (or lack thereof). You might also want to reflect here on why it has been difficult to track down data on certain aspects of the TNC’s operations. Alternatively, you might want to use this section to take up some debates over neoliberalism or arguments made in the academic articles you found on the TNC. You should feel able to agree or disagree with these arguments based on what you have discovered yourself. However, only make claims you can back up with data, examples, or other academic references. You could also evaluate any comments on the TNC’s own website in the same way. Likewise, you could use anything you wrote about in the TNC’s use of global imagery here, too.
CONCLUSION
The conclusion should actually be a conclusion! What is your main finding about the TNC? Imagine being asked about this by a reporter, parent, or former teacher. What would you say that you learned that was new? What stands out as the most interesting or amazing or depressing or strange feature of the TNC’s global development? What are the most important factors that have shaped this development? How does it exemplify more general global trends?
Notes
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