TNCs/Coca Cola Flashcards
What enables firm to become TNC
-Develop highly desirbale product within a price range that can be easily delivered around world.
-New innovative model/constant innovation eg Apple.
-Obtaining dominace in a market/monopoly power.
-Undercut competition on price due to efficiency.
-FDI to take advantage of low cost/lax laws/locate near de,and.
-Take advantage of transport systems for cheap, efficient production.
-Mergers, take-overs, aqcusitions.
-Horizontal/vertical integration. Offshoring, outsouricng.
Called the “a________” of globalisation
Architects
Describe spatial distribution of TNC HQs
TNC’s tend to have a hierarchal structure that makes decisions from top-down, this can put anyone who is not at the top of the hierarchy at risk from key decisions from above. Be it closures to save money/boost efficiency.
Mostly HICs but growing in EMEs. Eg North America, Europe and SE Asia. Often in world cities (synoptic). Few in Australia.
Marketing of TNCs: Describe
Global marketing/branding.
Multiple languages in instruction manuals.
Ethnocentric vs poly centric
Describe glocalisation and give 2 reasons for it
To maximise profits, TNCs adapt products to suit their customers needs geographically.
Law: Driving seat position.
Local interest: Mcdonalds McSpicy Aloo in Inida.
2 pros and 1con of vertical integration
No reliance on suppliers, cheaper with EOS such as transport.
Expensive
Horizontal integration is just mergers/takeovers etc. What is vertical disintegration?
Different parts of prodction process given to different companies to do.
1 benefit of TNC and 2 drawbacks not mentioned in econ
-Development of managerial roles.
BUT
-Speculative investments eg 2008 GFC.
-TNC can cease operation if not profitable.
-Large corp tax to host country if it hasn’t managed to reduce tax/avoid it. Trademarks/patents. Force SEZs (special enterprise zones).
Global revenue of Coca Cola
Market share
Recognition
Average servings per day
46 billion
26%
94% of people recognize
1.9 billion per day. 9 a day in 1886. Drastic change in volume over a relatively short temporal scale (when looking at figures)
Spatial distribution
144 offices in 67 countries. Spreads risk.
Domiciled in HQ in Atlanta, Georgia
Some globally except Cuba and North Korea
Bottling investment group where they bought small scale companies across world to increase effiency.
3 causes of growth
Investment, clever marketing (anyone can be Santa 2024), acquisitions of other firms
Coke acqusitions/marketing specifically
Coca-Cola has 3500 products within its entire brand. Cola, Fanta,Dasani water. 10% of all their revenue is spent on marketing even though 94% of all people on Earth already recognise the red and white branding. Coca-Cola’s recent marketing campaigns have aimed to link the beverage to a feeling of happiness, relaxation, love and other positive feelings (Taste the feeling being one slogan) As marketing streams change, as did Coca-Cola’s strategy. New hashtags, a Coco-Cola Emoji, Coke TV all formed in the last 2 years alone.
Glocalisation is shown in Coca-Cola’s famous de-branding tactic. Piloted in Australia when Coca-Cola took its brand name off their bottles in favour of the 150 most common names in Australia (accessing 42% of the population). It was an immediate success and the campaign was took to 70 more countries and the name list grew 17000 strong with many localised names. It made the process of consuming more about giving to one another and the use of names made it a much more personal process.
Positives of Coca Cola
-Training and education programmes – global commitment in women’s empowerment (5by20 programme to create 5 million female entrepreneurs by 2020).
-Massive employment opportunities both direct and indirect eg sugar in Mexico and in less developed economies such as N. Afruica. More than 700k employees.
-Using the brand name – Coca-Cola uses marketing to promote recycling and its distribution network to help deliver emergency aid for disaster relief.
-Sustainable Agriculture – Schemes such as rainwater harvesting systems for their tea production in China.
Negatives of Coca Cola
-Harsh working conditions in some of the bottling plants.
The Trade Union Conflict in Colombia between the government/local councils (alledgedly bribed by CC) vs Rising trade unionists.
Long hours for little pay – Most workers
-Unequal flows of capital – A lot of the profits end up back in the hands of the shareholders back in the USA. Monoploy power and tax avoidance. Benefiitng some countries more than others.
-Vulnerability – Bottling plants on the other side of the world from the ‘remote’ Coca-Cola HQ in Atlanta, USA could suffer due to ‘top-down’ decision making.
-Obesity issues
-Reliance on fossil fuels for supply chains.
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-Sports: However, conflicting messages can often be portrayed as sporting groups/teams/events are often sponsored by fast food companies, or carbonated drinks companies. This does not reflect the healthy image sports groups would want to convey.
-Global South eg Latin America vs global north in terms of flows of money
-Exhausting local water supplies and pesticides found in Indian bottles - 30x higher than limit in early 2000s
Aim
The Coca-Cola Company (“Company”)is a global business that operates on alocal scale, in every community where we do business.We are able to create global reach withlocalfocus.
Coca Cola Foundation: 3 Ws
Water, women, well-being
Give 3 water benefits
-China rainwater harvesting
-4 billion litres of water annually replenished since 2010.
For example, Coca-Cola’s “Replenish Africa Initiative (RAIN)” has helped provide clean drinking water to millions of people across Africa, addressing a critical issue in many host countries
Give one well-being benefit
-More than 2k college students in US funded by Coca Cola.
Describe 2 benefits of 5 by 20 programme for women
Coca-Cola’s 5by20 Program: 2012
Objective: Empower 5 million women entrepreneurs across Coca-Cola’s global value chain by 2020 through skills training, financial services.
• Scope: Targeted women in over 100 countries, focusing on small business owners like farmers, retailers.
• Success: By 2020, the program reached over 6 million women, exceeding its target, and was praised for fostering economic independence, though some critics highlighted challenges in sustained long-term impact and how well metrics were measured.
Coca Cola circular economy
- Progress Made: Coca-Cola has pledged to use at least 50% recycled material in its bottles by 2030, with efforts like “World Without Waste” showing incremental improvements.
- Challenges Persist: Despite these initiatives, Coca-Cola remains the world’s largest single-use plastic polluter (as per audits by established organizations).
TNC impacts on hsot country, employees, local businesses and UN
In the host country, there is increased rural-urban migration as farm workers seek out higher wages in TNC factories or call-centres. This creates a greater level of inequality between urban centres and rural areas. * Analysis of the role of TNCs in promoting economic growth. In the host country, contrary to popular beliefs TNCs often pay higher wages – average wage is 40% higher than that paid by local firms this can result in local firms having to close due to lack of workers. On the other hand, many TNCs use local firms to complete part of the production process increasing investment in the local area.
* They may consider that TNCs have on some occasions undermined the work of the UN. For example, despite attempts by UN to negotiate fairer trade between LICs and HICs, TNCs have frequently moved in and brought up land used by local farmers
Red and white colours influencing culture
Colours of Santa clause (potentially)
Evaluate fdi for job creation
Often capital intensive nature
Recent issues in uk regarding cans
High chemical counts Jan 25
Does the BIG still exist?
No too costly outsources instead and reinvest into marketing eg global athletes
Trade union death threat
Early 2000s for a leader campaigning for better work conditions. Scandal
Ronaldo impacting Coke
Moved it out of way in an interview lost $4 billion in market value
