Transnational Coporations (TNCs) EQ1 Flashcards
What is a TNC?
A company that has operations in more than one country
What are global production networks?
-a system where TNCs form partnerships with local companies in other countries rather than directly investing in new plants or acquiring firms.
-This allows companies to outsource production and services to foreign firms, creating an interconnected network of suppliers and producers across the globe.
-For example, brands like Dell and Tesco rely on outsourcing to build their global businesses, benefiting from trade liberalisation and government policies in developing countries
What are some disadvantages and positives of a TNC on its host country and local people?
Ads
-it encourages TNCs to glocalise for example McDonalds
Dis
-worker exploitation Nike workers in Indonesia only earn 0.3% of the final selling price
-Apple caused 18,000 tonnes of waste and landfill in 2018 China
What is glocalisation?
-Changing the design of products to meet the local tastes or laws
What is Offshoring and why do TNCs do it?
-When TNCss move part of their production process to other countries to reduce labour or other costs
What is Outsourcing and why do TNCs do it?
-TNCs contract another company to producer goods and services they need than do it themselves resulting in the growth of complex supply chains
-this allows them to benefit from the expertise of another company
Why do TNCs go global?
-to spread risk (e.g. those associated with industrial action/strikes or crop failure)
-to gain grants or other rewards from national governments who are trying to attract inward investment
-to operated where labour is cheap and less regulated
-to benefit from another companies expertise (outsourcing)
Why is glocalisation important?
-The growth of economies in Latin America, Asia, and the Middle East has attracted TNCs to new markets where over 2 billion people have moved out of extreme poverty since 1990.
-To tap into these markets, TNCs build global production networks and adapt their products to local tastes, a strategy known as glocalisation, helping them maximize profits and reach a wider consumer base.
What are some different ways glocalisation has been used by TNCs?
-By 2012, McDonald’s had 35,000 restaurants in 119 countries. In India, it adapted its menu to cater to vegetarians (Hindus and Sikhs) and Muslims by offering chicken burgers, McVeggie, and McSpicy Paneer. McDonald’s also opened a vegetarian restaurant in Amritsar for Sikh pilgrims visiting the Golden Temple.
-Unlike Disney and McDonald’s, Lego has not glocalised its products. Since 1949, it has produced the same designs in four locations—Denmark, Hungary, Czech Republic, and Mexico—and exports identical products worldwide, including China, without adjusting for local tastes.
