3.3b) How do TNCs contribute to the spread of globalisation and take advantage of economic liberalisation? Flashcards
1) How are TNC’s vital to the spread of globalisation?
1) Their expansion involves the free flow of capital, labour, goods and services.
1) What are the three factors that have led to the expansion of TNC’s?
1) Motive, means and mobility.
1) Under capitalism, what is the only motive?
1) Profit
1) How do companies make more profit?
1) By controlling and minimising costs, and by increasing revenues, through merging or taking over their competitors.
1) How is more profit made, through achieving economies of scale?
1) Expanding capacity, Amazon might increase warehouse size, whilst Maersk will increase ship size, reducing unit costs.
1) How is more profit made, through developing new markets?
New markets depend on creative product design, and desirability. The process involves expanding the markets or creating updated models.
1) Example of how more profit
is made, through horizontal integration:
1) Apple acquired Emagic and Logic Pro, to help expand its services.
1) What is vertical integration?
2) Give an example of such a company:
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.
1) How is more profit guaranteed, by diversifying the product range?
1) If one product fails another will succeed.
1) What are the means of TNC’s?
1) Banking and the free flow of capital. Unrestricted flows of finance connect banks, businesses and countries.
1) How do these flows of finance vary?
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
1) What is reverse colonialism?
1) India and China are now High- or Middle-Income Countries, and provide overseas investment.
1) In 2015, how many Indian businesses were there in the UK?
1) 800, employing over 110,000 people.
1) How much did Russia invest overseas in 2013?
1) US$87 billion
1) Where has Chinese overseas investment been visible?
1) They have bought Japanese household brands, and invest in African infrastructure. In the UK they own brands such as Pizza Hut.
1) What does mobility include?
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.
1) Are mobility flows flexible?
1) Yes, hence why controversial decisions could be made.
1) What happened in the case of India’s Tata Steel?
1) They left Britain, putting thousands of jobs at risk.
1) What happened in the case of Kraft’s takeover of Cadbury?
1) There were no guarantees for the 4500 workers at Bourneville factory.
1) What happened in the case of the world’s largest sports shoe manufacturer?
1) They halted production at a huge Chinese factory, causing thousands of workers to protest.
1) Give an example of a brand that really influences our lives:
1) Disney
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?
1) 11th
2) US$48.8 billion
3) 180,000 and 40,000 suppliers in 70 countries.
1) What is a New Economy?
1) This is where GDP is earned more through expertise in services such as finance, rather than the manufacture of goods.
1) What is Off-shoring?
1) When a company does work overseas, wither itself or using another company.
1) What is Out-sourcing?
1) This is when work is contracted out to another company, to another country would mean its off-shoring.
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?
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$2 billion.
1) What are the benefits of Disney’s just in time service?
1) It uses overseas manufacturers, which avoids having to pay for its own expensive production lines. Delivery times are also quick.
1) What are the disadvantages of Disney’s just in time system?
1) Overseas workers earn low wages, and factories have also used substances that are banned in the USA.
1) How was Disney one of the first companies to glocalise?
1) > Mulan marked a decision to enter China.
> The Hunchback of Notre Dam was launched to rebrand Disneyland Paris.
> The Lion King was aimed at Africa, Aladdin at the Middle East and Finding Nemo at Australia.
1) What are Disney’s influences on urban planning?
1) > The creation of shopping malls such as Disneyland, on suburban out-of-town developments.
> Disney-themed fast-food outlets.
1) What are Disney’s influences on media?
1) > 24-hour news channels in North Africa, the Middle East, Europe, Australia, Malaysia and Cuba.
> Internet/iPod services for TV and film downloads.
1) What are Disney’s influences on governments?
1) > US enforces copyright for companies like Disney.
> The Hong Kong and Tokyo governments paid US$ 1 billion towards their Disneyland’s.
