TNC's Flashcards
positive impacts of TNC’s
-raised living standards
-technology transfer
-political stability (due to economic growth)
-higher environmental standards (bring good practice to countries that dont have good env protection)
negative impacts of TNC’s
-tax avoidance (pay lowest tax as possible)
-growing global inequalities (tend to cluster in selected economies)
-Unemployment (outsourcing and offshoring)
-environmental degradation (can export the negative impacts where they operate to)
Glocalisation
changing the design of products to meet local tastes or laws in order to sell as much as possible
Why do businesses use glocalisation
-religion and culture
-laws
-local interest
Example of glocalisation
2012, mcdonalds had 35,000 restaurants in 119 diff countries including Mcspicy paneer
Physical factors why a country is detached
-distance from market
-low agriculteral potential
-lack of energy
economic factors why a country is detached
-high government debt
-poor transport and telocommunication infrastructure
-vunerable commodity cycle (boom and bust)
Political factors why a country is detached
-Exclusion from trade blocs
-weak commitment of gov to development
-corruption and conflict
Historical factors why a country is detached
-colonial borders
-lack of education- low skills
political instability in niger
-frequent coups and unrest (4 coups since 1960)
-suspension of international aid after 2023
Economic underdevelopment in niger
-limited infrastructure
-dependance on agriculture
-poverty rate (40%)
Geopolitical
the way a country’s size, position, etc. influence its power and its relationships with other countries
Geopolitical challenges in niger
-landlocked in sahal region
-transport costs (being landlocked adds around 50% to the cost of imports)
-regional conflict (in sahal conflict zone w boko haram terrorist groups)
-literacy rate (only 35% of above 15 yr olds is literate, reduce workforce potential)
Dependance of aid in niger
-around 40% of nigers budget is funded by foreign aid
-Debt burden (external debt is about 50% of GDP)
Environmental challanges in niger
-agriculture (employs 80% but only contributes to 40% of GDP)
-food insecurity (4.4 mill face insecurity in 2023)
-water scarcity (limited industrialisation or large scale farming)
Weak governance and corruption in niger
-corrupt gov (discourages FDI, unpredictable business environment)
why is North Korea politically switched off/ detached
-due to hereditary autocracy (gov of one person with absolute power)
-propaganda
-emigration prohibited
-60% live in poverty
-juche (self sufficient) ideology
How many TNC’s globally
60,000
how much % of economic activity do TNC’s account for
25%
patent
inventing something and getting rights to it
outsourcing
when a TNC chooses to offer a working contract with another foreign company
offshoring
when a TNC moves their own production process to other countries to reduce labour or other costs
example of offshoring
Dyson moved its manufactoring division to malaysia in 2002
Benefit of offshoring
Able to move factories closer to markets they’re serving e.g nissan building factories inside EU to serve europian countries
Acquisitions
when two firms in different countries join forces to create single entity, in 2015 a third of all FDI consisted of acquisitions
benefit of aquisitions
expanded markets and opportunity to reduce costs due to rationalisation (re-organize to increase efficiency)
joint venture
when two companies form a partnership to handle business in particular territory
example of joint venture
mcdonalds with local indian business to glocalise
benefit of joint venture
reduces risk a TNC is exposed to, make the TNC more sucsessful than either steakholder working alone
Benefits of branding
create an imagined global identity- creates loyalty, familiarity, brand name recognised nationally
Horizontal integration
when a business merges with another business in the same industry working at the same level
Benefit of horizontal integration
helps company grow in size and revenue, reduce competition and diversify product offerings
Vertical integration
when firms at different stages of production merge together
Benefit of vertical integration
improve operational efficiency, reduce production cost and increase revenue
Global production network (GPN)
links that extend nationally involving firms engaged in the production of goods, accounting for 80% of global trade
