GSGG - Transnational Cooperations (TNC’s)

Question 1

What is a TNC?

Answer 1

A company that operates across multiple countries

Question 2

Describe the usual spatial organisation of a TNC?

Answer 2

• the headquarters are in HIC’s - this is where they plan, talk about investment and make big decisions
• research and development is done in countries where they are specialised in researching that type of product
• the manufacturing and production is usually done in HIC’s due to lower labour costs, lower taxes/tariffs and therefore increased profits

Question 3

How do TNC’s create linkages through FDI?

Answer 3

• create links with countries by investing in them, which creates jobs and contributes to the economy
• Mergers - TNC’s merge with each other to form bigger companies and form foreign links
• Acquisitions - TNC’s buy other companies in order to expand

Question 4

Why may acquisitions have a negative impact on the host country?

Answer 4

• can lead to job losses since a large TNC is taking full control

Question 5

How do TNC’s create linkage with countries and companies through integration?

Answer 5

Vertical integration - taking ownership of a part of the supply chain

Horizontal integration - taking ownership of another company

Question 6

What are the trading patterns of TNC’s like?

Answer 6

• usually trade with HIC’s due to more concentrated demand there
• rapid increase in demand in NEE’s due to increasing populations and increases in disposable income

Question 7

What are the marketing patterns in TNC’s like?

Answer 7

• due to their high revenue, TNC’s tend to be able to adopt global marketing strategies, and create a trademark for themselves
• also have the money to change their marketing strategies in order to adapt to countries