Commerce By Pratik Jaipuriar

Commerce

TNC’s

TNC Management Issues

Running a TNC is a complex task. It involves many different factors than can affect aspects of the business.

Commercial Issues:
The main commercial issue is the diverse range of environments in which they operate. As they operate globally they must obey the local laws etc. they deal with this by understanding and adapting to the differences.

Financial Issues:

The global business cycle can be good and bad. For example it gives free access to markets and lower trade restrictions which leads to more profits. However, it also makes businesses more vulnerable to downturns.

Legal Issues:

There is no uniform set of international business laws. So therefore the TNC must follow the laws and customs of the host country it operates in. However, the TNC’s usually end up taking advantage of these countries by trying to minimise the amount of tax they pay and in turn maximise their profits. An example of this is Nike.

Environmental Issues:

TNC’s may affect they environment in many ways. Examples include; air pollution, deforestation, global warming and acid rain. For this reason many individuals and governments have put pressure on TNC’s to minimise their impact on the environment. Some governments have introduced new strict environment protection laws.

Employment Issues:

Two key employment issues for TNC’s are cost and mobility of labour. They should make sure that working environments are fair and that all staff are adequately paid.

Managerial and Executive Staff:

They are usually the highest priority. This means that they are treated much better than other employees.

TNC Ethical Issues

Ethics is basically doing what is ‘right’. TNC’s are expected to act ethically when doing their business. This can pay off has their reputation will go up if they ethical in the way they do business. However, unethical behaviour can result in a bad reputation.

Environmental Issues:

• The use of resources (non-renewable)


• Pollution of land, water or air (directly or indirectly)


• Garbage, waste


• Packaging waste


• Global efforts have been made to make TNC’s accountable


• Consumers now react to the new environmental concern (recycling and clean green products sell)

Financial Issues:

• Incorrect information to the government about company’s financial record


• Tax havens


• Companies spread the risk over a number of markets of investments

Legal Issues:

• Laws are different in each country


• TNC’s need a good understanding of this to operate well in foreign countries


• TNC’s take advantage of this and locate in lenient areas

Types of Promotion Strategies

• Advertising


• Product endorsement and sponsorships


• Event sponsorship and venue naming rights


• Product placement


• Guerrilla marketing


• Direct marketing and junk mail


• Special promotions


• Personal selling


• Publicity

Advertising – is the method of promoting, through consumers unconsciously or consciously absorb messages developed by advertising agencies. In advertising the main features are the brand name and the logo or slogan, which are associated with a certain company or product.
Product endorsement – when well-known personalities are paid to promote products.

Sponsorship - is when the personality is supported financially while training and performing.

Event sponsorship and venue naming rights – companies seek to increase public recognition of their brands by purchasing the naming rights for major sporting and cultural events.

Product placement – involves having products displayed prominently in movies or television programs.

Guerrilla Marketing – it is an unconventional and very flexibly method of promoting a product. Eg; and streaker in a cricket game who has ‘Vodafone’ painted on their back.

Direct Marketing – carried out via telemarketing, mail and email. The company asks you directly whether or not you would like to purchase their product.

Junk Mail – is the use of advertising through flyers or constant emails.

Special Promotions – used to boost sales. Often these promotions are limited to selected products. This includes sales and discounts.

Personal Selling – it is a form of direct selling involving door-to-door or in-store promotion of a particular product.

Publicity – free media coverage given to company by media outlets.


Globalisation Pro’s and Con’s

Pro’s of Globalisation

• The developing economies that encouraged globalisation during the 1990’s experienced economic growth rates that were four times greater than those of other developed nations


• It means easier access to goods and services


• More knowledge about the world etc.


• Better living conditions in richer countries


• Great increase in employment and global wealth

Con’s of Globalisation

• It pollutes the environment (TNC’s)


• Destroys smaller cultures


• Worse living condition conditions in poorer countries


• TNC’s exploit labour in many developing countries


• TNC’s also lower the power of the government to control economic activity


• What happens to one economy effects others