2.4 Nature and role of TNC's Flashcards
What is a TNC
Trans national corporation operating in at least 2 countries
Why do TNC’s operate in multiple countries
Escape trade tariffs
Reach foreign markets
Low production costs
Exploit natural resources
What are the characteristics of a TNC
- Control key suppliers, processing and production
- Maximise economies of scale
- Have a brand / logo
How are TNC’s spatially organised in terms of headquarters
TNC’s locate wherever best benefits them
Headquarters usually in a large home country city. Research done near high education for workforce and facilities
Subsidiary headquarters in each continent
Production in low income countries
What are the 3 types of TNC’s
Primary sector (LIC to HIC)
Secondary sector (LIC)
Tertiary/Service (LIC but footloose)
How is the spatial organisation of TNC’s changing
Primary sector TNC’s are increasingly working with HIC’s instead of LDE’s due to new technology
For example, Fracking is increasingly occurring in the USA
What is fracking and its disadvantages
Water + chemicals pumped underground at high speeds to fracture rock and capture natural gas
Creates tremors, water pollution and harms wildlife
Why do Secondary sector TNCs work in LDE’s
- Cheap Labour
- Good workers ethic
- Can Invest in training
- Government incentives/ enterprise zones and compete for contracts
Why do tertiary / service sectors work in LDE’s
Go wherever has the cheapest labour and best education (language)
What is a very innovative form of spatial organisation for TNC’s
Agglomerations
What is an agglomeration
When similar industries locate near each other to share ideas and resources
What are the 2 types of agglomerations
- Urbanisation economy - Benefits that DIFFERENT industries get being together. Brought together to share the market and infrastructure (mall)
- Localisation economy - Benefits that the SAME industry receive from being close together like LABOUR POOL and KNOWLEDGE SPILLOVER (Silicon Valley)
How do TNC’s have so much control over the market
Through integrating different parts of the business into one so they have the monopoly
What are the 2 types of TNC integration
Vertical - when the entire supply chain is owned by the entire company (to create economy of scale)
Horizontal - when a company diversifies its operation (usually when one firm takes over another) Such as Disney with Pixar and ABC
Give an example of a TNC
Apple Inc.
Give some context for Apple
Opened 1976
Number one global brand
100,000 full time employees
Located in over 16 countries
Who is apples biggest market
Young , wealthy, educated with growth in the Asia pacific region
What is apples spatial organisation like
Headquarters Apple Park in California
Products designed in Silicon Valley
Subsidiary headquarters in Cork
Manufacturing by Foxconn China
Who are Foxconn
“The Silicon Valley of china” with over 400,000 workers, lots of whom live onsite being paid $200 a month
Why are apples secondary headquarters in Cork
Second lowest EU tax rate
What are the positive impacts apple has had on Cork
4,000 employees (60% Irish)
Attracted other high tech firms
Attracted highly skilled workforce
Made infrastructural improvements
What are the negative impacts apple has had on china
Low pay - long hours
Poor health and safety
Child labour
Suicide
Give some stats to back up the negative impacts apple has had on china
60+ hours week for $100 month
In 2010 50 people were poisoned
In 2010 14 people committed suicide
What are some environmental concerns about apple
- Uses finite resources for electricity
- Using toxic chemicals (discharged into rivers)
- Not recyclable products
What did apple do in response to the environmental concerns
“green my apple” campaign switched to 75% renewable energy, and also audit their factories more often
What are the advantages and disadvantages of spatial organisation in the TNC home country
Cheaper goods
Get jobs in financial services
De-industrialisaiton and structural unemployment
What are the advantages and disadvantages of spatial organisation in the TNC outsourced country
New jobs, technology and skills
Multiplier effect
Poor working conditions
Exploiting resources + environment
Lots of economic leakages
