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Explain the term 'Transnational Company' (TNC) - Leaving Cert Business - Question A(i) - 2008
Question A(i)
Explain the term 'Transnational Company' (TNC). A transnational company (TNC) is an enterprise that operates in multiple countries, having its headquarters in one n... show full transcript
Worked Solution & Example Answer:Explain the term 'Transnational Company' (TNC) - Leaving Cert Business - Question A(i) - 2008
Step 1
Explain the term 'Transnational Company' (TNC).
Answer
A Transnational Company (TNC) is defined as a corporation that has its headquarters in one country while establishing branches and subsidiaries in multiple countries around the world. These companies engage in global business operations, producing and distributing goods and services across international borders.
TNCs leverage their global presence to optimize operations and supply chains, respond to market demands, and capitalize on competitive advantages in various regions. This structure allows them to adapt efficiently to the economic conditions and consumer needs of different markets.
Step 2
Discuss the reasons for the development of transnational companies in Ireland.
Answer
Several factors have contributed to the growth of transnational companies in Ireland:
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Transport Improvements: The advancement of air and sea transportation has made it easier and more efficient to supply products to a global market, facilitating quick delivery options for TNCs.
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Improved Telecommunications: Enhancements in communication technology have allowed companies to efficiently send and receive important information, streamlining operations across borders.
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Larger Markets: Many businesses find that their domestic markets do not offer sufficient opportunities for growth. By expanding operations to Ireland, they can reach larger, more diverse customer bases.
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Economies of Scale: Expanding their presence in Ireland enables companies to achieve economies of scale, reducing costs per unit as production increases, thereby improving competitiveness.
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Removal of Trade Barriers: The elimination of trade restrictions has expanded opportunities for international trade, allowing companies to easily engage in cross-border activities without significant hindrances.
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Financial Incentives from Government Agencies: The Irish government offers various financial incentives aimed at attracting foreign investment, making it appealing for TNCs to establish operations there.
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Taxation Advantages: Ireland's corporate tax rate, at 12.5%, is one of the lowest in Europe, attracting many transnational companies seeking tax efficiency.