Wednesday 10 January 2007

Dyson: An example of a transnational company


Until 2002, the Dyson vacuum cleaner company was widely regarded as a rather unusual British business. Its owner, James Dyson, had resisted moving operations abroad, despite the fact that labour and land costs would certainly be cheaper elsewhere. Choosing instead to keep his manufacturing plant in the UK, Dyson was often portrayed by the media as a patriotic figure, given that his reluctance to relocate was increasing the firm’s operating costs and reducing potential profits.
Why did Dyson change his mind?
In 2002, Dyson announced that he was relocating the production wing of his business to Malaysia. As a result, 800 semi-skilled UK assembly workers lost their jobs, although 1200 head office (tertiary) and research (quaternary) employees have remained in place at the firm’s Wiltshire headquarters. The sackings led to accusations of hypocrisy being levelled against James Dyson by workers and Trade Unions. He quickly became “a symbol in the debate over globalisation and outsourcing” (The Independent on Sunday, 27 February 2005). However, this year’s record profit of £102.9m - representing a 137% increase on previous figures – seems to vindicate his decision to move. Dyson products have even overtaken those of the Hoover firm to become the number one best-seller in the US. It appears the new locational strategy is working!

Who benefits?
There are benefits for Malaysia, as this inward investment helps the development of that country. Workers’ earnings help to boost Malaysian consumer markets. There are benefits for the UK economy also, as Dyson’s profits increase. Increased corporate taxes mean more money is available for public services in the UK, such as health and education. There are new opportunities for scientists to work for Dyson.
However, the manufacturing workers sacked in Wiltshire in 2002 may have a differing view of events and some will have struggled to find new work. There are always losers and winners whenever firms relocate.
The Dyson story can provide an up-to-date look at the globalisation of industry (in this case the global electronics industry), including the winners and losers of the relocation processes involved. It is a specific example of a trans national corporation. Important themes in the Dyson story for GCSE include:
· Changing features of employment as a country develops and industry evolves from secondary to tertiary and quaternary and its geographical causes and consequences.
· Many countries which are rapidly industrialising are known as NICs: Newly Industrialised (or Industrialising) Countries, and they include places such as Taiwan and Malaysia. These countries are also part of the Pacific Rim giving industries located there easier access to North American markets.
· LEDCs emerging as the 'least cost location' for a number of industries, notably in manufacturing. Also, many call centres (tertiary industries) are being moved to countries other than the ones in which the companies headquarters are based. Manufacturing examples are the move of companies like Dyson to Malaysia and Dr. Martens to China.
The textbook example of a TNC in an LEDC is Fiat in Brazil. Learn at least one of these case studies! Part of Fridays lesson will be reviewing 'Economic World'.

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Must have a map!