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A Concise Intro to TNCs

Sample essay paper, Structure and Operation of TNCs on the Clothing Industry Construction and Operation of TNCs on the Clothing Industry


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TNCs are multinational companies, which were their operations worldwide. This suggests that they employ executives from different areas of the world and decisions arent made from one position. Moreover, the decisions made are affected by the global factors and thus have to be produced in response to those variables and in attempts to resolve them.

Since TNCs deal with people of different cultures and races, their needs need to be fulfilled with no biasness. It therefore follows that the structure and operations of TNCs has to be strategic because multiculturalism is considered. This will ensure that the cultures of the different people are integrated and consequently the goods generated fit the various customers concentrated.

The clothing sector is just one of those industries that have to make sure that multiculturalism is highlighted. It should be mentioned that different individuals within the world wear differently and therefore so as to fulfill these people, their practices and beliefs ought to be placed into consideration. As an example, the sort of clothing to be promoted to the Islamic state differs from this to be promoted to an Asian country. For TNCs from the clothing industry to be successful, multiculturalism is your most important area of emphasis.

The essay below focuses on the structure and operations of TNCs from the garments market.

Structure and Operation of TNCs in the Clothing Industry

Since Hoecklin (2006) puts it, the functioning and success of TNCs tremendously rely upon cultural determinants. It is extremely simple for local companies to ignore the significance of cross-cultural direction but once they start internationalizing their operations, cross-cultural management becomes inevitable.

Prior to any company can go international despite the business in regards in, there are variables that are believed. A few of them are the government policies, connections with the outside business environment and line and size of business among others. This usually means that the regional companies must take quite a while before they could go global (Madsen & Servais, 2007).

On the other hand, the clothing industry companies are observed to take a different process, and it is somewhat simplified. The very first point is that of exports adopted by building own outlet chains and signal licensing arrangements and finally establishing production facilities in the countries of attention (Hoecklin, 2006).

Formation of TNCs in the clothing market has been triggered by a variety of variables that were effected by the EU Corporation. All these agreements were supposed to protect the companies in this industry. Since there was free flow of fabrics and other clothing items, the firms within this sector felt invited to internationalize.

The custom barriers on this trade were raised encouraging the shareholders much more.

Both import of raw materials and export of the final products is taken with seriousness. Import of grade stuff involves interpersonal communication and this helps to ensure that the products created and exported are made of high quality and fit in the worldwide market.

The culture of an organization is a source of non-verbal communicating and helps in deciding the sort of a supplier one is dealing with. This suggests that a business vendor does not expect to become good high quality materials from a provider who has a disarranged and shared workplace. It is mostly possible this sort of a supplier is not dependable because he may be temporary.

The simplicity of establishment of international outlets in the clothing industry depends on the size and access to capital. For the huge companies, this task is very easy and requires very little time to be implemented. For instance, LPP Corporation was able to expanse its business to a number of nations with ease due to its huge revenues.

With cross-cultural communication, business communication is made easy. This enables the producers of the textile products produce products, which are acceptable in various states where the firm does business. Plus, the helps organoleptic testing, thats the best testing of the caliber of the materials used as raw materials.

At the 21st century, most clothes delivery is completed with the manufacturers located in Asia. This was credited to the high manufacturing costs in other countries bearing in mind that manufacturing prices are low in Asia and China due to the access to quality fabrics. The companies found in Asia are internationally competitive because of the number of advantages they benefit from.

To start with, labour costs are very low with a single working hour going as low as 80 cents. Furthermore, the businesses benefit from the network of their sockets, simple and inexpensive transport between the corporation and the subsidiaries, positive legislation and property costs as well as competent and inexpensive labor. This leaves them outweigh many of different firms found in different nations (Grandys & Grandys, 2010).

It follows that many large domestic companies are made to transfer their companies to China and Asia where production costs are low. These are consequently some of the motives, which force businesses to make TNCs. The main countries, which bring large national companies, are Thailand, Indonesia, India and China.

In these nations, cultures are exotic like when a company is conscious o them, it is guaranteed of succeeding in the garments sector (Madsen & Servais, 2007).

Since there is need for a huge capital outlay for any company that decides to go international, the companies in the clothing industry have developed ways in which they apply to increase the necessary capital. The primary one is that employed by the Kalisz Big Star Ltd. Company in which it bought rights and shares from Big Star Holding, a Swiss corporation.

In this manner, it was able to raise the necessary capital to create a TNC.

Lodz firm implemented the next method of increasing the capital when it surfaced using a Lithuanian partner in efforts to join the marketplace in Lithuanian. Lodz firm was able to be successful in its moves since "The Polish firm contributed machines and experience, while the overseas partner provided premises for the new companys headquarters, a supply network and also the wisdom of the market" (Grandys & Grandys, 2010, p. 58).

Formation of TNCs in the clothes business isnt only limited by the fiscal limitations. Other aspects obstructing this sort of business include comprehension of cultural standards, foreign markets, and international legislations. The disadvantages occurring form this obstacles can only be reduced through the rise of knowledge on the factors. In this manner, the firm will be able to fit in several kinds of civilizations and legislations by operating as required.

In respect to cultural things, a choice has to be created before a item is brought to the market of whether to differentiate or standardize the item. Standardization means that the identical product is going to be taken to each of the targeted clients while distinction implies that the product will be in different forms before it can be sol. With differentiation, different kinds of products will be sold to several types of customers (Madsen & Servais, 2007).

The sort of their targeted clients will choose the conclusion of differentiation. For example, men and women in the management position have exactly the identical dress codes no matter the countries of origin. The identical case applies to the folks going to watch a match or the game players.

All that needs to be done is differentiation from the colours.

As mentioned earlier however, there are cases in which differentiations of the clothes is warranted. For example, working with customers by orthodox Muslims suggests the garments sold to them should be connected to their own culture and customs. These kinds of clients are important and thus cant be ignored whenever these decisions are being made.

Nature of this Generation Circuits from the Clothing Industry

Back in 2005, 1st January, the clothes sector united a new age. This caused stiff rivalry between the developing and developed countries. As a consequence of increased technology use, the companies increased their working rate.

While the firms in the developed nations employ both male and female employees, those in the developing nations employ mainly female employees (Dicken, 2007).

The firms have since formed production circuit where each of the phases has its unique organizational and technological features. For example, its clear that the technological demands in the very phase are different from people at the sewing stage.

Fabric Manufacturing design planning Manufacturing supply ingestion


the caliber of the materials



During the manufacturing period, the customers are permitted to come up with their own input like fresh designs. The wastes are created in all the stages of manufacturing.

Technological and Demand Changes

Demand change because of changes in preferences and tastes (Dicken, 2007). The kind of clothing worn by different people around the world keeps changing. For instance, the kind of clothing worn by the ancient Africans was chiefly made of pure skin while this has changed since technology changes.

Moreover, the climatic and weather conditions keep on changing and the call for change in the kind of clothes and the cloth used. These modifications affect demand significantly.

With change in technological improvements, ways of earning garments are advancing and this may mean vary in the forms of clothing made.

Government Regulation of the TNCs

There is formation of authorized bodies from the authorities governing TNCs. These authorized bodies make sure that there are minimal import obligations among other levies paid by the TNCs in the clothing market. This further creates the trade simpler.


Its notable that cross-culture studies are regions of interest in the clothing market. With differentiation due to culture differences, the chance of rejection of a sort of a product is reduced. The customers will believe that their customs are honored and therefore feel comfortable with the purchases.

Further, a firm within this industry making the choice of moving global should think about the worldwide agreements out there.


Dicken, P. (2007). Global Shift: Restoring the Changing Contours of the World Economy. New York: SAGE Publications Ltd.

Grandys, E. & Grandys, A. (2010). "Transnational Corporations and Cross-cultural Management." Journal of Intercultural Management, two(2): 53-66.

Hoecklin, L. (2006). Managing Cultural Differences. Strategies for Competitive Advantage.

Madsen, T. G. & Servais, P. (2007). "The Internationalization of Born Globals: an abysmal


Vodden, K. (March 2008). "Clothing and Textiles and Sustainable Purchasing At Memorial University of Newfoundland."