Geography Unit 1: Essay Exam Example Question

Assess how far TNCs bring benefits and problems for their suppliers and consumers

Transnational corporations account for 25% of the worlds economic activity and employ 1% of the worlds total workforce. Some TNCs make more money than the GDP of many countries. TNCs grow through three factors; motive, means and mobility.

Under a capitilist society, the main motive is profit. TNCs are looking to minimise costs so they can maximise profits, and this is done by controlling costs of materials and prodcution by using mergers and take-overs. Merging or taking-over can occur in three ways. The first method is horizontal intergration which is when a company buys out their competition. Ford aquired Jaguar, Volvo and Land Rover and became an up-market company. Vertical integration is another way of merging as it involves controlling and owning every stage of production like Exxon does with its oil wells, oil tankers, oil refineries and petrol stations. Another way to conttrol costs is to utilise economies of scale as most companies do.

TNCs need means to grow, and banks provide those means by providing finance through loans. HSBC is known for supporting businesses across the globe. Companies prefer foreign invesments to boost their market presence or to take advantage of labour and environmental laws. USA is the top country in the world for investing overseas. Recently, a reverse colonialism has began, as more developing countries have began investing overseas like Singapore and Hong Kong.

Mobility is another factor that has helped companies grow. Mobility includes physically through transport and electronically through communcations. Cheaper and faster transport is now available meaning that larger quantities can be transported aross the globe however this inceases pollution and co2 emissions which has negative effects as it…