1. Read and learn the following words and word combinations. Translate the examples:

corporation n – 1) об’єднання, корпорація; AE – акціонерне товарис­тво (від лат. corpus – pl. corpora – тіло; зібрання документів)

corporate adj – корпоративний, об’єднаний (в одну групу);

incorporate v – об’єднуватись в одну групу; створювати корпорацію

e.g. A transnational corporation is a firm that owns and runs economic units in two or more countries.

manage v – 1) керувати, управляти; 2) управляти, вміти обходитись (з кимось або чимось)

manager n – управляючий, директор, керівник, менеджер, адміністра­тор management n – 1) управління, керівництво; 2) правління, дирек­ція, адміністрація

managerial adj– управлінський, керуючий

e.g. What strategy have they chosen to manage their foreign subsidiaries?

extract v – 1) витягувати, вижимати, випарювати; 2) добувати; extractive industry – (гірничо)добувна промисловість

e.g. The South of the country is known for its developed extractive industries.

excess n – 1) надлишок; 2) перевищення; 3) надмірність; far in excess – значно більше

exceed v – перевищувати

e.g. They possess resources far in excess of their needs.

range n– 1) серія, ряд; 2) межі, діапазон, розмах; 3) номенклатура, асорти­мент; product range – асортимент продукції; price range – діапа­зон/рух цін; range of services – обсяг послуг

range v – змінюватись; коливатись в певних межах; охоплювати; простя­гатись від … до

e.g. Companies range in size from small to midsize to big.

concession n – 1) уступка; 2) знижка (в ціні); 3) пільга; 4) концесія; tariff concessions – тарифні уступки; tax concessions – податкові пільги; foreign concessions – іноземна концесія

e.g. To promote economic activity the government can grant tax(ation) concessions to particular industries.

scale n – 1) масштаб; 2) розмір, розмах, обсяг; 3) шкала; 4) рівень, сту­пінь (розвитку); pl. scales – ваги; national scales – загальнонаціональні ма­сштаби; rate scale – шкала розцінок, тарифний розклад; tariff scale – тарифна сітка; taxation scale – таблиця податків; шкала ставок оподат­кування; economies of scale – економіка, що визначається збіль­шенням масштабу виробництва

e.g. In certain economic sectors corporations take advantage of the economies of scale.

pool n – 1) спільний фонд, об’єднані запаси; 2) пул, об’єднання (угода картельного типу між конкурентами)

poоl v – об’єднувати, стягувати разом

e.g. Corporations have a large pool of managerial talents, capital and technical resources.

assets n – активи, капітал, фонди, власність; assets and liabilities – ак­тив і пасив балансу; fixes assets – основний капітал, основні засоби

e.g. This company’s fixed assets exceed those of their competitors.

corporate decision making (taking) – корпоративне прийняття рішень

e.g. In a transnational corporation corporate decision making is centralized.

operate v – 1) діяти, працювати; 2) проводити операції; 3) експлуату­вати, розробляти; 4) керувати

operation n – 1) дія, робота; 2) торгівельна або фінансова операція; 3) розробка, експлуатація; 4) технологічна операція, процес; 5) режим ро­боти; 6) AE – керівництво; foreign trade operations – зовнішньоекономі­чні операції; joint operation – спільна праця

e.g. TNCs operate in a worldwide market-place.

II. Read and translate the text:

Transnational Corporations

One of the most important features of the modern world is the evolution of the global economy. The leaders in this process are the transnational corporations. They operate in a world-wide marketplace from which they buy raw mate­rials, borrow money, manufacture their products and to which they sell their products.

A simple working definition of a transnational corporation is a firm that owns and manages economic units in two or more countries. Most frequently it involves foreign direct investment by a corporation and the ownership of economic units (services, extractive industries or manufacturing plants) in seve­ral countries. Many transnational corporations (TNCs) are extremely powerful institutions and possess resources far in excess of the most member-states of the United Nations. The scope of operations and the territory over which some TNCs range are more expansive geographically than any empire that has ever existed. They transferred global economic interdependence from the spheres of trade and money into the area of industrial production.

What are the distinguishing features of a transnational corporation? A TNC tends to be an oligopolistic corporation in which ownership, management, production and sales activities are performed under several national jurisdictions. It is comprised of a head office in one country (home country) with subsidiaries in other countries (host countries). The principal objective of the corporation is to provide the least costly production of goods for world markets. This goal may be achieved through acquiring the most efficient locations for production facilities or obtaining taxation concessions from host governments.

TNCs are located in economic sectors where they can take advantage of econo­mies of scale, low transportation costs, their priority in research and development. They operate most effectively in the OECD (Organization for Economic Cooperation and Development) countries because of the existence of relatively standardized markets and generally low barriers to trade and foreign investment. Their importance is growing because of their presence in particular sensitive and strategic high technology industries.

TNCs have a large pool of managerial talent, financial assets and technical resources and they run their gigantic operations with a coordinated global strategy. A global strategy uses a standardized product and marketing strategy worldwide that is the same product is sold in essentially the same manner throughout the world. Another way to reach and operate in a foreign market is to apply a multinational strategy and thus treat each national market differently. In this case product and marketing strategies differ according to the customs, tastes and buying habits of particular national market. Whatever the strategy the principal goal of a TNC is to expand and secure its market position.

Another feature of a TNC is vertical integration and centralization of corporate decision making. IBM, EXXON, General Motors, Mitsui, Toyota, Fiat and Nestlé are typical examples of vertically integrated TNCs. The strategy of a vertically integrated TNC is to place the various stages of production in different locations throughout the globe. Such fragmentation of the production process aims at taking advantage of cost differences of different locations and using favourable government tariff policies that provide for duty-free entry of semi-­finished products or of goods assembled abroad from components produced at home. The result of this internationalization of the production process has been the rapid expansion of intrafirm trade. A substantial share of world trade has become the export and import of components and intermediate goods rather than the trade of final products.

To be present in the three major markets of the world -the United States, Western Europe and Japan is a necessity for TNCs. Such global operations need huge capital. For this reason alliances between TNCs have become more frequent. The New United Motor Manufacturing Company, established by two powerful rivals General Motors and Toyota to produce subcompact cars in the United States is the most evident example of such cooperation.

Interfirm cooperation, arrangements promoted by national governments, joint ventures, off-shore production of components are new practices applied by TNCs to strengthen their position in the world production and trade.

III. Answer the following questions:

1. What activities do the transnational corporations engage in a world market?

2. How is a transnational corporation defined?

3. What is the scope of TNC’s operations?

4. How are the TNCs organized?

5. How did the TNCs expand global economic interdependence?

6. What is the principle objective of the TNCs?

7. In what sectors are the TNCs located?

8. Why are the TNCs operations the most effective in the OECD countries?

9. What is the essence of the global strategy?

10. How does a multinational strategy correlate with a polycentric philosophy?

11. What is the essence of vertical integration?

12. How is the fragmentation of the production process achieved?

13. Why do the TNCs cooperate?

14. How do the TNCs strengthen their position in the world production and trade?

IV. Give Ukrainian equivalents of the following:

raw materials; working definition; the ownership of economic units; global economic interdependence; under national jurisdiction; production facilities; particular sensitive and strategic industries; to treat smth differently; to secure market position; stages of production process; final products; subcompact car.

V. Give English equivalents of the following:

світовий ринок; зарубіжнi прямі інвестиції; надзвичайно могутня органі­зація (заклад); відмінні риси; найменш затратне виробництво; скористатись перевагою масштабної економіки; лідерство; високі техно­логії; стандартизована стратегія продукції та маркетингу; купіве­льні звички; безмитний ввіз; проміжні товари.

VI. Translate multicomponental word groups. Mind logical relations within the group. Remember that the centre of the group is the last word:

market position, subcompact car, semi-finished products, duty-free entry, low transportation costs, production process fragmentation, off-shore component production, corporate decision making centralization, favourable government tariff policies, standardized product and marketing strategy, particular sensitive and strategic high technology industries

VII. Match the definition on the right with the word on the left. Learn the definitions:

alliance	person who competes with another
assets	general plan of action
integration	association, union
rival	anything owned by a person, company, etc. that has money value and that may be sold to pay debts
strategy	combining parts into a whole, joining with other groups

VIII. Based on the definition of oligopoly give your explanation of the terms “oligopolistic corporation”, “oligopolistic market”

Oligopoly. A form of industry (market) structure characterized by a few firms, each large enough to influence market price. Products may be homogeneous or differentiated¹. The behaviour of any firm in an oligopoly depends to a great extent on the behaviour of others. In general, entry of new firms into an oligopolistic industry is difficult but possible.

¹homogeneous – однорідний; differentiated – відмінний, різноманіт­ний

IX. Based on the meaning of prefixes translate the following sets of words:

Inter- between, from one to another; intra- within

1. interrelation, interlink, intermediate, interconnect, interact, interfirm trade

2. intra-atomic, intramolecular, intratropical, intrafirm trade

8. Fill in the gaps with the words from the list below:

rivals, a component factory, a joint venture agreement, incorporated, strategies

1. Peugeot signed … to produce cars in India in 1994.

2. The company’s example demonstrates good green-marketing ….

3. American companies are registered or … with the authorities in the state where they have their headquarters.

4. Plants owned by multinationals are much more efficient than their ….

5. The company plans to open a sales office and … in Taiwan.

8. Match the synonyms. Use any 5 words in the sentences of your own:

scope	union
rival	join together
headquarters	scale
alliance	head office
incorporate	competitor

XII. Match the words with the opposite meaning. Use any 5 words in the sentences of your own:

standardized	duty-free
presence	random
to expand	absence
dutiable	to contract
to pool	to separate

XIII. Translate into English:

1. Транснаціональні корпорації – це надзвичайно могутні організації, що діють на світовому ринку.

2. Найменш затратного виробництва можна досягти, отримавши най­більш ефективне розміщення виробничих потужностей.

3. ТНК використовують або глобальну, або багатонаціональну страте­гію у своїх діях.

4. Нові методи, що застосовуються ТНК для зміцнення їх положення на світовому ринку, простягаються від співпраці між фірмами до оф­шорного виробництва компонентів..

5. Вертикальна інтеграція ТНК сприяє інтернаціоналізації процесу ви­робництва.

6. Завдяки ТНК глобальна економічна система охоплює також і сферу промислового виробництва.

12. Topics for discussion:

1. Give a general characteristic of a TNC.

2. Dwell on the distinguishing features of a TNC:

1. the organization structure;

2. location in the sectors of economy;

3. advantages over other forms of business;

4. strategies to secure market position;

5. vertical integration, its essence and results;

6. the necessity to establish alliances.

3. Speak of the impact of TNCs on the developing countries. Provide your own examples.

12. Skills practice:

Assignment 1. Read the following passage below:

Coca-Cola and Procter & Gamble, an American consumer-goods giant, announced a drink-and-snack joint venture that will combine 40 of the company’s brands in a venture with revenues estimated at $4 billion a year. P&G will gain access to Coke’s distribution network and the soft-drink giant will be able to take advantage of P&G’s apparently unrivaled snack-research capabilities. (The Economist)

1. Find out what motivations lie behind each participant of the joint venture. What spheres of each TNC’s activity will the other TNC gain access to?

2. Focus on the language. How are the two TNCs named in the passage? Translate the word combination ‘apparently unrivaled snack-research capabilities’.

Assignment 2. Read the passage and study the chart below:

Three leading European steel makers joined to create the world’s largest steel producer. France’s Usinor, Arbed of Luxembourg and Spain’s Acelaria announced a three-way merger to form a group with 110,000 employees and annual sales of $27.3 billion. If approved by the European Commission, the deal will create the world’s biggest steel group, capable of producing 45 m tones of steel each year (see the chart).

Assuming the three-way merger goes ahead, the new group and its two nearest rivals combined will control a little over 10 % of the world steel market.

Top Steel Producers tones m, 2000
Thyssen Krupp
NKK
Corus
LNM
Nippon Steel
POSCO
Unicor/Arbed/Aceral*

*Assuming merger goes ahead

1. Based on the text and the chart find out how big the world steel market was in the year 2000.

2. Find out what share of the world steel output was produced by each of the top steel producers (in %).

3. Build a pie chart of the world steel output, including minor steel producers into the category “others”.

4. Use the information to write your analysis of world steel output for the year 2000. Make use of the following verbs in the proper form: to account, to provide, to contribute, to add, to represent

Unit Seventeen

Foreign investments and the world economy