International Trade and Access to Markets 2
- Created by: Amy_Hut
- Created on: 22-03-21 18:48
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- Nature and Role of TNCs
- Why do TNCs operate in more than one country?
- To escape trade tariffs
- To exploit resources available in foreign countries
- To find lowest cost location for production
- To reach foreign markets more effectively
- Linkages, trading & marketing patterns
- Benefits and costs of TNCs
- Benefits
- For host
- Generates jobs
- Brings new tech & skills to workers
- Multiplier effect
- For TNC
- Fewer regulations & laws
- Lower costs
- Greater access to markets & resources
- For country of origin
- Specialise in financial services and R&D occupations
- Cheaper goods
- For host
- Benefits
- Why do TNCs operate in more than one country?
- Spatial Organisation
- Production
- Primary sector
- Nature and Role of TNCs
- Why do TNCs operate in more than one country?
- To escape trade tariffs
- To exploit resources available in foreign countries
- To find lowest cost location for production
- To reach foreign markets more effectively
- Linkages, trading & marketing patterns
- Benefits and costs of TNCs
- Benefits
- For host
- Generates jobs
- Brings new tech & skills to workers
- Multiplier effect
- For TNC
- Fewer regulations & laws
- Lower costs
- Greater access to markets & resources
- For country of origin
- Specialise in financial services and R&D occupations
- Cheaper goods
- For host
- Benefits
- Why do TNCs operate in more than one country?
- Production
- Tends to be in developing economies
- Resources in developing countries tend to have previously been exploited
- Based wherever there are unexploited resources
- Primary sector
- New technology has allowed some exploitation of home countries
- E.g. Fracking for oil/gas industries in N America
- Based wherever there are unexploited resources
- Secondary sector
- Based in manufacturing regions of developing countries
- Work ethic means willing to work long hours, little holiday & non-unionised
- Labour costs are low
- Some investment in education, can train workers easier
- Production
- Based in manufacturing regions of developing countries
- Government incentives
- Tax free breaks, enterprise zones & less restrictive environmental regulations
- Based in manufacturing regions of developing countries
- Work ethic means willing to work long hours, little holiday & non-unionised
- Labour costs are low
- Some investment in education, can train workers easier
- Tertiary sector
- Locate where labour costs are low with some education or in proximity to their markets
- Service-based TNCs
- More footloose
- Language is important factor
- Service-based TNCs
- More footloose
- Integration
- Vertical integration
- Horizontal integration
- Company diversifies its operations by expansion, merger or takover
- Gives broader capability at some point in production
- The supply chain of a company is owned entirely by that company
- From raw materials to finished product
- Vertical integration
- Gives TNC control over supplies/stock and reduces cost
- Economies of scale
- Costs
- For TNC
- Ethical issues
- For host
- Economic leakages
- Poor working conditions
- Environmental damages
- For country of origin
- Loss of manufacturing jobs
- Structural un-employment
- De-industrialisation
- Loss of manufacturing jobs
- For TNC
- Poor working conditions
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