A-Level Geography - Human - Transnational Companies
- Created by: Noah_S
- Created on: 10-04-22 15:54
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- Transnational Companies
- Features
- TNC's operate in all types industries (primary, secondary, tertiary and quaternary)
- Shell trades oil and gas (primary)
- Toyota manufactures vehicles (secondary)
- Aviva provides insurance services (tertiary)
- Intel researches new electronics (quaternary)
- TNC's bring investment into countries, spread technologies and produce cultures
- MacDonalds brings Western fast food to Japan/China
- In 2013, TNCs were linked to 80% of global trade
- Top 10 TNCs own 86% of telecommunication sector, and 70% of the computer industry
- One of the main driving forces behind globalisation because of economic, political and cultural interactions
- Spatial organisation creates a global supply chain
- TNC's headquarters located in big HIC cities, where there are skilled workers
- R&D located in cities and towns where there are highly educated people, often in the same country as HQ
- Regional R&D located closer to where they are selling to, so they can tailor products to that market
- Factories located in NEEs / LICs where it is cheaper or where their market is located
- TNC's operate in all types industries (primary, secondary, tertiary and quaternary)
- Linkages and production
- Links
- Mergers
- Two companies agree to become one bigger company
- BP and Amoco merged in 1998
- Acquisitions
- One company buys another
- Ford bought Volvo Cars in 1999
- Subcontractors
- Use foreign companies to manufacture without owning the business
- Nike uses subcontractors to manufacture some product
- FDI
- Involves mergers, acquisitions and subcontractors
- If HSBC acquires a bank in Indonesia, that's FDI
- Mergers
- Integration
- Vertical Integration
- When a company takes over other parts of its supply chain
- Through FDI, Shell owns every part of its supply chain
- Horizontal Integration
- When a company merges with another at the same stage of production
- In 2006, Disney took over PIXAR Studios, which both make family-orientated animations
- Vertical Integration
- Links
- Impacts
- Headquarter Country
- Development of higher-order jobs such as R&D
- Overseas investment adds to income for the whole nation
- Workforce may need to relocate or make overseas visits
- Corporation tax is not paid fully by all TNCs from loopholes
- Individuals and companies more willing to be involved in foreign investment
- Host Countries
- Increases employment and raise living standards
- Improves level of skill and expertise
- Multiplier effect happens, which increases purchasing power and economic growth
- Many jobs are low skill in LICs
- Majority of profits sent back to home country
- Headquarter Country
- Features
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