nature and roles of TNC'S Flashcards
what are TNC’S?
companies that operate in at least 2 countries
headquarters in one country with the business operations in a number of others
why do TNC’s operate in more than one country?
- to escape trade tarrifs
- to find the lowest cost location for their production
- to reach foreign markets more effectively
- to exploit mineral and other resources
what are the common characteristics of TNC’S
- controlling key supplies
- outsourcing of production
- control of processing at each stage of production
- maximising global economies of scale by organising production to reduce costs
spatial organisation of TNC’S
increasingly flexible
traditionally headquarters are in a major city and there is subsidary headquarters in each continent
what are the 3 production sectors?
primary
secodnary
tertiary
what is the primary sector?
based wherever the unexploited resources are (developing countries)
what is the secondary sector?
located in manufacturing regions of developing countries
due to low labour costs and investment in education
what is the tertiary sector?
service based TNC’S are more footloose (low labour costs, good education and proxmity to markets)
Benefits of TNC’S for the HOST COUNTRY
- improve economy
- improvements to infrastructure
- brings new technology
- improves living standards
- gives workers new skills
problems of TNC’S for the HOST COUNTRY
- area could lose its culture
- poor working conditions
- leakage of profits
- investment is only short term
- exploitation of resources
benefits for the TNC
- low labour costs
- cheap production
- profit
- greater access to new resources and markets
problems for the TNC
vulnerable to hazards
ethical issues
social and environmental conscience
what are the benefits for the ORIGIN COUNTRY (tnc base)
- creates jobs (highly paid)
- services in place
- call centre jobs - highly paid
- cheaper goods
what are the problems for the ORIGIN COUNTRY (tnc base)
- loss of manufacturing jobs
- structural unemployment
- de-industrialisation
