There are various of interpretations to what Trans-national Tourism Corporation means. However, this essay will suggest that Trans-national Tourism Cooperation (TNC) as Hampton (2011) suggested that it has been defined as large firms with subsidiaries in 2 or more countries. Hall suggested that TNCs are where the organisational behaviour ideas are an approach for marketing and promotion in the global market. Mowforth and Munt states that 80% of mass tourism is dominated by TNCs and around 80% of tourists who travel by air to a less-developed country (LDC) will stay at hotels owned by TNCs. (Britton, 1991) TNCs benefits from vertical integration as it helps to reduce transaction cost because there is no ‘middle-man’ to deal with and the size of TNCs also mean that they will benefit from economies of scale. TNCs are also known as multinational companies. Tourism for the Trans-national co-operation is the centre point, and specifically more focused on Less Developing Countries.
The first advantage of a TNC according to Mowforth and Munt Japanese Tourist arriving there from Tokyo. The tourist is transferred with a luxurious car Honda from the airport and stays at the Japanese owned Hotel as well as eats all the authentic Japanese food. However, travels back to Tokyo in the Hondo and explains that Japan is a good Third World destination. Furthermore, there could have been a BMW and an international hotel- but the point is argued that it is the main ownership that has made the benefit for the Tourism Industry.
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This now means that only the small proportion of the money is spent in the country itself so this connects to leakage as Mowforth and Munt adds that this does not just mean the purchase goods by the tourist in a destination also looks at goods and services by hotels and all other organisations. Leakage is not the main d of disadvantage for all financial aspects as Tourists itself but it is highly in use of Third World Countries.
Mowforth and Munt say that the level of leakages is highly important the reason for this is this affects the economic power which is held by the TNCs for all local communities and government. What should be taken into account that due to not having a relevant collective data it is very difficult to calculate the leakage in a Tourist destination.
Second advantage for a TNC in a poor country is having a TNC is powerful for the industrialisation especially for all the Asian countries where there needs to be rural development. Therefore, the government makes the farming prices quite low- and saves money; takes cheap food so the workers do not demand high wages. With the positive side to having a TNC this creates a good form of power for the poor people in LDCs as the TNCs clearly know the wants and the basic needs of the poor people and making sure they are getting what they deserve. (Madeley, J. 2003)
A general advantage for the TNCs is having more a Foreign Direct Investment (FDI) as this heavily benefits the Tourism factor. Nusa Dua in Bali is encouraging the TNCs to develop their restorts. FDIs are usually very good for funding for local or government projects that the country wants to run. This benefits Bali, by having a better economy, better jobs for the locals making Bali a better destination. This has helped Bali to succeed to be a better destination and improve its roads. This would mean more Tourists would now come into Bali and this will benefit them as a flourished economy.
An disadvantage of a TNC reported by Pattullo in Mowforth and Munt (2005:51:-2)- this shows that there is a high level of leakage it is an overall of 50-70% but it states that for Jamaica it is 37% as this is known as more of a assorted economy therefore, the leakages here can be a lot lower then anywhere else. So this in general states that the money paid into the country never actually reaches the Third World Destination itself therefore, this is not a successful way for the country to expand economically.
Another disadvantage is that all the First World Tourists who fly to a Third World Tourist destination- are mass tourists. The reason being for this is that they fly and possibly stay in a hotel which is TNS owned- these tourists may not form a mass or alternative tourism and may not be seeking for, adventure, wildlife and authenticity. This is not a huge factor but, mass tourism is becoming more of a straight focus however, they are being affected by the new, sustainable and alternative forms of tourists.
An disadvantage of having a monopoly firm and the TNC being in control of this is being in contention with the mass tourism being contend of the Third World Tourism which often is different, and causes a lot of problems of dependency, and exchange leakages with under-developed economies by foreign owned enclaves. (Brohman, J 1996)
So the important aspect of this is that the TNC must address the issue of sustainability. Carothers in Mowforth and Munt (1993:15) quoted that the final touches of the Earth Summit (agenda 21) the main focus was to remove the TNCs from the text of the Agenda 21. Agenda 21- is when there is aware of the environment being eco-friendly as well being sustainable. In the Third World Country it had to be clear that they knew what the term “multinational operate”. All the governments also needed to know what a Trans-national cooperation did for them was to gain more stability and have an increase in the legal rights. (Hamed, D 2005)
The impact on all the human resources is an encouragement in employment and as the TNC has an increasing wage levels. The local firms- which are Tourism related (TNCs) make more connection with the suppliers and the distributors which makes a good business when they make the effort to have a better connection with the local suppliers and the distributors. However, there is no proof of how the TNC if they are crowding over the local firm.
(Hamed, D 2005)
Advantage of a TNC is that they are usually very small in most of the developing economies, because much of the involvement takes the non-equality forms. Some of the government assists the main development of the infrastructure itself. The new technology that can be introduced in a developing country and different management skills can make the Less Developing Country a lot better.
(Hamed, D 2005)
Another disadvantage stated by Mowforth and Munt is that the British tour operators are not aware of visiting Burma the reason being for the unawareness is purely the ethical reasons. As hotels were being built by the TNCs- Asia countries of: Japan, Malaysia, Singapore, South Korea and Thailand, with also French and Swiss Interests were very involved. Tourism in Burma is a good example of with a lot of interest to the government itself. But in many Less Developed countries the government and the TNCs and the case of Burma itself (SPDC) enlisted the assistance of this body.
Mowforth and Munt acknowledge that it is very important that the understanding and the issue of power is transparent strong if the destination wants a development. The TNCs commonly under the impression that the community has a strong and that the locals are in work by the power for the rest of the national government. This is a case some but not all. But the policies of the national government itself are in some situations influenced by the external organisations. The policies for the development of tourism are largely suitable for profits and for First World investors rather then the communities and the government itself.
Another strong case study to support this essay is that the FDI- has been considered towards a strong factor of the economic development. The TNCs in the imports industry especially for Argentina and Brazil, there has been a strong relation of the TNCs being involved in the manufacturing industry just before the recent FDI boom took place. (Chudnovsky, D and Lopez, A 2004)
The TNCs in Argentina and Brazil showed a significant amount of performance with a high level of technology and the productivity which was related to the TNCs. But, for the domestic market they wanted to take advantage of their own domestic markets itself. However, the TNCs did its best and used its own strategies for all different areas for all its economic development for the host country itself.There had been a huge number of arrivals of the FDI itself for all the presences of the TNCs as the economies increased in the 1990s. In this particular case Argentina and Brazil gained a very strong level with all the TNCs which were present.
All the investments made by the TNCs aimed to increase all the assets, and with a better market. ( Chudnovsky, D and Lopez, A 2004)
As competition becomes more of a wider spread- the TNC then has simple integration strategies. All the TNC searches are done very effectively with a range of assets in all the different locations.
More than 50% of the TNCs sales In Brazil as compared with the number of sales itself as these were hardly even 25% the figure seems significantly low. Since the Brazilian Industry- it is not a major surprise to find that the TNCs in the country are more of an export orientated then of Argentina itself.
The TNCs within the groups are Tourist operated with a much of a generally larger coefficients in Argentina and Brazil. ( Chudnovsky, D and Lopez, A 2004)
( Chudnovsky, D and Lopez, A 2004) suggests that the Brazilian Tourist Industry itself has much of a widespread the reason being for this is due to the number of linkages between the elements of being spread around than Argentina. In general this suggests that the TNCs have looked at the domestic market itself rather than the any of the human resources itself. This means that the TNCs have their goods that are more strategic in relationship to the firm’s performance at all national and regional level.
In Argentina the TNCs clearly affect the imports and the exports. This is due to the relationship of all the sales and a result of a down side in the negative foreign trade balances. In Brazil similarly the TNCs for all the domestic firms are at a higher rate and grow incredibly faster.
In Argentina and Brazil there has been an FDI (Foreign Directive Investment) which has helped the TNCs become more recognised as a main leader in Argentina and Brazil. The key linkages between the Foreign Directive Investment and The Foreign Trade show that the TNCs have had a bigger contribution than all the national firms itself. However, there is a higher chance for the imports with the local enterprises. From, the whole research of Brazil and Argentina the TNCs have had a lot less linkages with the local community itself then the domestic firms. From the research Brazil and Argentina has TNCs but with a reduce amount of linkages with the local community itself than the domestic firms. ( Chudnovsky, D and Lopez, A 2004)
In conclusion to this essay despite the fact the concerns over TNCs on the Less Developed Country having TNCs are very beneficial for a host country. Additionally, the government has to make sure that they are fully in power with this and this situation should not be changed around as the government should be powerful enough to help a host country. Every point that was discussed in this essay has some understanding to the aspect of the impacts and the implications of the TNCs in some LDCs. From the understanding of the TNCs it is felt that International Tourists tend to understand better to what TNCs do and how they will profit the Less Developed countries- due to the complications in an Less Developed Country not having enough educated people therefore, the International Tourists will look at the wider focus of the capitalist mode as the product if recognised can not be in separation. (Jenkins, R 1987)
Brohman, J (1996) New Directions in Tourism for Third World Development (Online), 23 (1), 48-70 Available from: http://www.stepuptravel.org/downloads/library/new_directions_for_tourism_in_third_world.pdf (Accessed 23 March 2011)
Chudnovsky, D and Lopez, A (2004) Trans-national Corporations Strategies and Foreign Trade Patterns in Mercosur Countries in the 1990s (Online), Cambridge Journal of Economics 28 (5), 1-18, Available from: http://www.law.wisc.edu/gls/documents/foreign_investment_recommended2.pdf (Accessed 21 February 2011)
Hamed, D (2005) What is Agenda 21(Online). Avaliable from: http://www.lbhf.gov.uk/external/la21/index.htm (Accessed 20 March 2011)
Hampton, M. (2011) Lecture Slide 6 on Trans-national Tourism
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Harrison, D., (2001) Tourism and the Less Developed World. CABI, Wallingford.
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