The nature and role of TNCs
- Created by: steloah1
- Created on: 02-05-22 15:43
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- The nature and role of Transnational corporations
- Spatial organisation
- TNC's engage in research and developement to maintain competitive position
- Near centres of higher education
- Agglomeration of companies in Silicon valley, California
- Agglomeration is when companies locate near each other to share ideas and resources
- Assembly of Apple's main products is outsourced to Foxconn city, Shenzhen in the Guandong province, North of Hong Kong
- TNC's engage in research and developement to maintain competitive position
- Production
- Primary industry
- Based wherever there are unexploited resources
- More prevailent in less developed countries
- Hydraulic fracking makes more reserves of raw materials viable - North America
- Secondary industry
- Typically outsources to devoloping regions in east and south asia
- Low labour costs
- Investment in education - less training needed
- Work ethic means that workers are willing to work long hours, with little holidays, in a non-unionised labour environment
- Typically outsources to devoloping regions in east and south asia
- Tertiary industry
- Operate in areas where low labour costs are balanced with good education
- India has a high proportion of English speakers - call centres
- Operate in areas where low labour costs are balanced with good education
- Primary industry
- Linkages, trading and marketing patterns
- Vertical integration
- An arrangement in which the supply chain of a company is owned entirely by that company
- Reduces cost because of economies of scale
- For example, BP has negotiated exploration and production rights in over 40 oil and gas fields world wide
- Owns its own pipelines and has its own shipping fleet
- 1,100 retail service stations in the UK
- An arrangement in which the supply chain of a company is owned entirely by that company
- Horizontal integration
- A strategy when a company diversifies its operation by expansion, merger, or takeover
- Kraft Foods took over Cadbury in 2010
- Merged with Heinz in 2015
- Kraft Foods took over Cadbury in 2010
- A strategy when a company diversifies its operation by expansion, merger, or takeover
- Vertical integration
- Nature and role of TNC's
- Why might a TNC relocate?
- To find lowest costs of production and exploit resoures. E.g. Arcelor Mittal in Liberia, Mongolia and Congo
- Increase economies of scale
- Out-sourcing
- To find lowest costs of production and exploit resoures. E.g. Arcelor Mittal in Liberia, Mongolia and Congo
- Why might a TNC relocate?
- Spatial organisation
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