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
    • 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
      • 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
    • 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


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