3.3b) How do TNCs contribute to the spread of globalisation and take advantage of economic liberalisation?

Question 1

1) How are TNC’s vital to the spread of globalisation?

Answer 1

1) Their expansion involves the free flow of capital, labour, goods and services.

Question 2

1) What are the three factors that have led to the expansion of TNC’s?

Answer 2

1) Motive, means and mobility.

Question 3

1) Under capitalism, what is the only motive?

Answer 3

1) Profit

Question 4

1) How do companies make more profit?

Answer 4

1) By controlling and minimising costs, and by increasing revenues, through merging or taking over their competitors.

Question 5

1) How is more profit made, through achieving economies of scale?

Answer 5

1) Expanding capacity, Amazon might increase warehouse size, whilst Maersk will increase ship size, reducing unit costs.

Question 6

1) How is more profit made, through developing new markets?

Answer 6

New markets depend on creative product design, and desirability. The process involves expanding the markets or creating updated models.

Question 7

1) Example of how more profit

is made, through horizontal integration:

Answer 7

1) Apple acquired Emagic and Logic Pro, to help expand its services.

Question 8

1) What is vertical integration?

2) Give an example of such a company:

Answer 8

1) This is when a company controls every stage of production from exploration to sales.
2) Exxon Mobil, controls oil wells, tankers, refineries and petrol stations.

Question 9

1) How is more profit guaranteed, by diversifying the product range?

Answer 9

1) If one product fails another will succeed.

Question 10

1) What are the means of TNC’s?

Answer 10

1) Banking and the free flow of capital. Unrestricted flows of finance connect banks, businesses and countries.

Question 11

1) How do these flows of finance vary?

Answer 11

1) > From year to year.
> Over medium term: In 2008, businesses reduced levels of investment, this recovered by 2014.
> Long term: Countries that received FDI in the 1980s and 1990s, now provide FDI to overs

Question 12

1) What is reverse colonialism?

Answer 12

1) India and China are now High- or Middle-Income Countries, and provide overseas investment.

Question 13

1) In 2015, how many Indian businesses were there in the UK?

Answer 13

1) 800, employing over 110,000 people.

Question 14

1) How much did Russia invest overseas in 2013?

Answer 14

1) US$87 billion

Question 15

1) Where has Chinese overseas investment been visible?

Answer 15

1) They have bought Japanese household brands, and invest in African infrastructure. In the UK they own brands such as Pizza Hut.

Question 16

1) What does mobility include?

Answer 16

1) > Fast and cheap transport.
> Rapid communications, using fibre optics and satellites.
> New production technology: Provides fast turn-around from orders to delivery.
> Global production networks, which link sources of raw materials, finance and manufacturing. They are run from company headquarters.

Question 17

1) Are mobility flows flexible?

Answer 17

1) Yes, hence why controversial decisions could be made.

Question 18

1) What happened in the case of India’s Tata Steel?

Answer 18

1) They left Britain, putting thousands of jobs at risk.

Question 19

1) What happened in the case of Kraft’s takeover of Cadbury?

Answer 19

1) There were no guarantees for the 4500 workers at Bourneville factory.

Question 20

1) What happened in the case of the world’s largest sports shoe manufacturer?

Answer 20

1) They halted production at a huge Chinese factory, causing thousands of workers to protest.

Question 21

1) Give an example of a brand that really influences our lives:

Answer 21

1) Disney

Question 22

1) In the 2016 Forbes list of the top brands, where was Disney placed?
2) In 2014, what was its revenue?
3) How many workers and suppliers does it have?

Answer 22

1) 11th
2) US$48.8 billion
3) 180,000 and 40,000 suppliers in 70 countries.

Question 23

1) What is a New Economy?

Answer 23

1) This is where GDP is earned more through expertise in services such as finance, rather than the manufacture of goods.

Question 24

1) What is Off-shoring?

Answer 24

1) When a company does work overseas, wither itself or using another company.

Question 25

1) What is Out-sourcing?

Answer 25

1) This is when work is contracted out to another company, to another country would mean its off-shoring.

Question 26

1) How is Disney an example of the new economy?
2) How much does merchandise earn Disney a year?
3) Between 2013 and 2015, how much did Frozen earn?

Answer 26

1) Its ideas are just as important as its goods. Its ideas originate in the US, but its goods are produced overseas.
2) US$37 billion.
3) US$2 billion.

Question 27

1) What are the benefits of Disney’s just in time service?

Answer 27

1) It uses overseas manufacturers, which avoids having to pay for its own expensive production lines. Delivery times are also quick.

Question 28

1) What are the disadvantages of Disney’s just in time system?

Answer 28

1) Overseas workers earn low wages, and factories have also used substances that are banned in the USA.

Question 29

1) How was Disney one of the first companies to glocalise?

Answer 29

1) > Mulan marked a decision to enter China.
> The Hunchback of Notre Dam was launched to rebrand Disneyland Paris.
> The Lion King was aimed at Africa, Aladdin at the Middle East and Finding Nemo at Australia.

Question 30

1) What are Disney’s influences on urban planning?

Answer 30

1) > The creation of shopping malls such as Disneyland, on suburban out-of-town developments.
> Disney-themed fast-food outlets.

Question 31

1) What are Disney’s influences on media?

Answer 31

1) > 24-hour news channels in North Africa, the Middle East, Europe, Australia, Malaysia and Cuba.
> Internet/iPod services for TV and film downloads.

Question 32

1) What are Disney’s influences on governments?

Answer 32

1) > US enforces copyright for companies like Disney.

> The Hong Kong and Tokyo governments paid US$ 1 billion towards their Disneyland’s.