Topic 4 Flashcards
What is a TNC
Transnational co-operation
Companies that operate in at least two countries. Headquarters in one country but with the business in other countries
What can TNCs operate in
Any sector
TNCs operating in a primary sector
Mining, oil and gas industries
BP
TNCs operating in a secondary sector
Hi-end computer and electronic products
Apple/Samsung
TNCs operating in a Tertiary sector
Supermarkets
Walmart (Asda)
Fast food chains
(KFC and McDonald’s)
Common features of TNCs
Make significant use of FDI
Hierarchial (Power and control concentrated)
Largest TNC in the world
Berkshire Hathaway - Finance
89 bn profits
Never heard of them
Allowing power to be held by anymous people
How much is ICBC (TNC bank) worth compared to Japan
ICBC assets = 5,500 billion whereas Japan as a country is worth 4,000 billion.
A bank we have never heard of is worth more than the entire country of Japan - one of the richest countries in the world
Where do the largest TNCs originate from
Very few TNCs have orignated from within Africa
More than 1/4 of the TNCs come oout of the USA
Spatial organisation of TNCs who operate in Primary Industries
Based where there are unexploited resources
Will tend to be in developing countries as more resources in developed countries have been depleted
Spatial organisation of TNCs who operate in Secondary Industries
Labour costs are lower
Normally based in South Asia
Regions of developing countries
These countries invest in eduation - easier to train workers
Spatial organisation of TNCs who operate in Tertiary Industries
Are more footloose
Loacte where labour costs are low, but education levels are high
Language - very important - english global language of business
Vertical Integration
The company owns the entire supply chain (BP is a good example)
Horizontal Integration
Diversification as they will take over or merge with other companies. (UNILEVER)
Benefits and Negatives of TNCs to the Host Country
Benefit -
Generates Jobs and income
Brings mew technology
Workers will devlop new skills
Negatives
Poor working conditions
Exploitation of resources
Economic Leakages
