Transnational Corporations - Lee Cooper Jeans Case Study

Lee Cooper Jeans is an example of a Transnational Corporation (TNC). A TNC is a corporation that operates in more than one country. 

Lee Cooper is a large, wealthy international country. It has its headquarters in England (a rich area of the world) but has many other branches and suppliers all over the world. Production occurs in poorer areas of the world: The jeans are sewn together in Ras Jebel, Tunisia. Ras Jebel is home to a skilled workforce, with each person producing over 2000 garments a day. Tunisia a poorer country with lenient health and safety laws; there are no safety guards on machines in the factory and Indigo dye is washed out into the environment. 

The relaxation of laws has allowed Lee Cooper Jeans to invest in foreign countries such as Tunisia, Namibia and Italy. The relaxation of laws has also increased the provision and speed of international transport and developments in communication with the use of fax, telephone and email. Together, these allow Lee Cooper Jeans to operate globally. 

Advantages of TNC'S

• Trained machinists in Lee Cooper Tunisia receive 58p an hour which is low but above the legal minimum of 47p an hour. 
• Companies such as Lee Cooper bring much needed money into the country. The local economy benefits from the company and business. For example, Namibia thrives off the copper industry, providing mostly for TNC's
• Lee Cooper has helped to develop Tunisia by bringing in technology and knowledge that it did not already have. For example, there are now spawned textile and sewing courses at the local college in Ras Jebel. Furthermore, the city has advanced technologically as the company has brought computers and other means of communication. 
• Lee Cooper has helped to develop transport links around the world. There are now links between Tunisia and Milan, Turkey, Benin, Northern Island, Hungary, Japan and France. 
• Lee Cooper has created jobs for the local population of Ras Jebel, as well as jobs in the factories that supply to Ras Jebel. For example, 500 women work in the Lee Cooper factory in Tunisia. 
• TNC's offer consumers the best deal possible. Consumers want the best value and big businesses like Lee Cooper are able to give it to them. E.g LC jeans in England are only £19.95
• TNC's allow people in developing countries to buy consumer goods that they would never have been able to buy in the past. For example, women in Ras Jebel are no longer wearing black cloth and have moved onto jeans thanks to Lee Cooper. 
• In Benin, farmers earn more by providing cotton than farming for subsistence. 

Disadvantages 

• Trained machinists receive 58p an hour which is below the Tunisian garment industry average of 92p an hour. 
• Some companies have been accused of exploiting the workforce rather than benefitting it. Usually there are tax incentives for Transnational corporations to locate in developing countries. Most TNC's take their profits out of the country, meaning there is little benefit to the developing country. For example, cotton farmer Zinkponon made just £15 profit from one and a half tonnes of cotton. 
• Transport links such as planes or boats to Milan, or travel links to Turkey only serve the direct needs of Lee Cooper and not the wider area as well. 
• Many multinational companies have very poor records on pollution and worker safety. In the Lee Cooper factory in Ras Jebel, there are no safety guards on the machines and women are at risk of pounding there finger with a needle. Companies try to cut corners with both safety and pollution in order to keep costs down. The factory in Ras Jebel washes out indigo dye into streams and rivers, where it blocks out the light in the water and kills plants and fish. 
• TNC's are footloose and may move their operations out of a country at any point in search of lower wages and cheaper production elsewhere. This creates economic uncertainty within the host country. For example, the mine closure in Namibia, Africa.
• Working conditions in factories are poor. Workers only get 15 minute toilet breaks.